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entitled 'Intellectual Property: U.S. Trade Policy Guidance on WTO
Declaration on Access to Medicines May Need Clarification' which was
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
September 2007:
Intellectual Property:
U.S. Trade Policy Guidance on WTO Declaration on Access to Medicines
May Need Clarification:
Intellectual Property:
GAO-07-1198:
GAO Highlights:
Highlights of GAO-07-1198, a report to congressional requestors.
Why GAO Did This Study:
The WTO Agreement on Trade-Related Intellectual Property (TRIPS)
requires all 151 World Trade Organization (WTO) members to provide
baseline protections, including 20-year patents for innovative
pharmaceuticals. The Trade Act of 2002 granting Trade Promotion
Authority (TPA) to the President outlined three negotiating objectives
related to intellectual property (IP). The first two aim to strengthen
IP rights and enforcement abroad. The third calls for respect of the
WTO Doha Declaration on TRIPS and Public Health, which addresses access
by developing countries to patented medicines, particularly in epidemic
and emergency situations.
This report (1) describes the Declaration and its interpretation by the
United States and other nations; (2) analyzes how USTR has balanced
respect for the Doha Declaration with the other two IP objectives in
negotiating free trade agreements; and (3) evaluates the extent of
public health input by agencies and the private sector. We reviewed
official WTO and U.S. government documents, interviewed U.S. and
foreign government officials, and obtained private sector views.
What GAO Found:
The 2001 Doha Declaration on TRIPS and Public Health was adopted by WTO
members to stress the importance of implementing the TRIPS Agreement in
a manner supportive of public health. The U.S. interprets the
Declaration as a political statement that recognizes the severity of
public health crises while affirming the importance of IP protection.
It maintains that the Declaration neither changes existing TRIPS
obligations, nor creates new rights and does not assigns public health
greater priority than IP protection. USTR says the Declaration
clarifies flexibilities already in TRIPS, including the flexibility to
compulsorily license patents under certain circumstances. USTR
recognizes these as being allowed for WTO members, including those
facing public health crises, but only in a fashion that will not unduly
harm patent holders. Some developing countries assert they provide
broad discretion to ensure access to medicines when IP regulations
present barriers to affordable care.
USTR balances respect for the Doha Declaration with TPA’s other two IP
negotiating objectives by actively promoting high levels of IP
protection for pharmaceuticals while making targeted allowances for
developing country partners. USTR believes that this longstanding U.S.
pursuit of high IP protections for pharmaceuticals creates incentives
for investment in research and development of new treatments,
ultimately enhancing public health. With regard to the TPA objective of
respecting the Doha Declaration, USTR’s key policy change was to not
insist upon two provisions it sees as relevant to the Declaration in
FTAs with developing country trading partners. Otherwise, USTR has
continued to pursue other pharmaceutical related IP protections that it
does not consider related to the Doha Declaration. Reactions to USTR’s
record are mixed. The pharmaceutical industry considers these types of
FTA provisions critical for preserving incentives for research and
innovation. However, some academics, experts, nongovernmental
organizations (NGOs), and generic producers have expressed concerns
that these provisions may delay entry by cheaper generic products. In
response to similar concerns in Congress, a bipartisan agreement was
reached with the Administration to revise four recent FTA’s prior to
their submission for Congressional approval.
U.S. interagency and private sector input into trade negotiations
related to public health have remained limited since Congress enacted
TPA. The Department of Health and Human Services (HHS) and other
agencies generally endorse USTR’s view that strong IP protection
promotes public health and access to medicines, and interagency input
has been primarily technical in nature. Within the formal private
sector trade advisory system, a public health representative was
recently added to 2 of the 16 private sector advisory committees, but
not until USTR had concluded nine trade agreements. USTR did obtain
some public health views through other formal and informal means during
this period.
What GAO Recommends:
If Congress disagrees with USTR’s interpretation and implementation of
TPA guidance with regard to IP and public health, it should specify
more clearly its intentions for U.S. trade policy and public health
policy input.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.GAO-07-1198]. For more information, contact
Kireb Tager at (202) 512-4347 or YagerL@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
The United States Has a Narrower Interpretation of the Doha Declaration
Than Some Other WTO Members:
USTR Has Maintained Its Pursuit of High IP Standards and Made Some
Allowances for Doha Flexibilities in Negotiating FTAs:
USTR Is Implementing and Overseeing Trade Agreements in a Manner
Consistent with Its Overall Approach of Promoting High Standards
concerning IP Rights:
Public Health Input on IP Rights Has Been Limited in U.S. Trade
Negotiations:
Conclusions:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Technical Assistance on IP Rights and Public Health:
Appendix III: GAO Contact and Staff Acknowledgments:
Table:
Table 1: Countries Listed in the Special 301 Report With Mention of
Pharmaceutical-related Issues Compared to All Countries Listed (2000-
2007):
Figures:
Figure 1: Timeline of Major WTO Events on IP and Public Health:
Figure 2: FTA Pharmaceutical-Related IP Provisions and Side Letters
Matrix:
Figure 3: Data Exclusivity and Patent Protection, Three Possible
Scenarios:
Figure 4: Patent Linkage Process in the United States:
Figure 5: Number of Pharmaceutical Provision Mentions in Special 301
Reports (2000-2007):
Figure 6: Public Health Representation on Industry Trade Advisory
Committees:
Abbreviations:
ADI: Access to Drugs Initiative:
ARV: antiretroviral:
CAFTA-DR: Central America-Dominican Republic United States Free Trade
Agreement:
CIEL: Center for International Environmental Law:
CPPATH: Center for Policy Analysis on Trade and Health:
DNDI: Drugs for Neglected Diseases Initiative:
EU: European Union:
FDA: Food and Drug Administration:
FSI: Foreign Service Institute:
FTA: free trade agreement:
GAP: Health Global Access Project:
GDP: Gross Domestic Product:
GPhA: Generic Pharmaceutical Association:
HHS: Department of Health and Human Services:
ICTSD: International Center for Trade and Sustainable Development:
IFPMA: International Federation of Pharmaceutical Manufacturers &
Associations:
IP: intellectual property:
ITAC: Industry Trade Advisory Committee:
MSF: Doctors without Borders:
NAFTA: North American Free Trade Agreement:
NGO: nongovernmental organization:
NIH: National Institutes of Health:
OECD: Organization for Economic Cooperation and Development:
OGAC: Office of the Global AIDS Coordinator:
OGHA: Office of Global Health Affairs:
OTT: Office of Technology Transfer:
PPP: purchasing power parity:
PEPFAR: President's Emergency Plan for AIDS Relief:
PhRMA: Pharmaceutical Research and Manufacturers of America:
PTO: U.S. Patent and Trademark Office:
TEPAC: Trade and Environment Policy Advisory Committee:
TPRG: Trade Policy Review Group:
TPSC: Trade Policy Staff Committee:
TRIPS: Trade-Related Aspects of Intellectual Property Rights:
TPA: Trade Promotion Authority:
UNAIDS: The Joint United Nations Program on HIV/AIDS:
UNCTAD: United Nations Conference on Trade and Development:
USAID: United States Agency for International Development:
USTR: U.S. Trade Representative:
WHO: World Health Organization:
WIPO: World Intellectual Property Organization:
WTO: World Trade Organization:
United States Government Accountability Office:
Washington, DC 20548:
September 28, 2007:
The Honorable Edward M. Kennedy:
Chairman:
Committee on Health, Education, Labor and Pensions:
United States Senate:
The Honorable Henry A. Waxman:
Chairman:
Committee on Oversight and Government Reform:
House of Representatives:
An international effort led by the United States in the 1980s to
incorporate intellectual property (IP) protection into the trading
system culminated with the World Trade Organization (WTO) Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1995.
Under TRIPS, all WTO member countries are obligated to establish a
minimum standard of laws and regulations protecting copyrights,
trademarks, patents and other forms of IP rights. Patents are
particularly important to the U.S. pharmaceutical industry and provide
patent owners the legal means to prevent others from making, using, or
selling new inventions for a limited period of time, subject to certain
conditions and exceptions. As the 2000 deadline for developing
countries to implement TRIPS obligations approached, however, some
developing countries expressed concern about subjecting health-related
inventions such as new drugs to IP rules, especially given the
increasingly serious AIDS epidemic. These concerns were part of a
larger and still ongoing debate over how to balance long-term
incentives for drug innovation with the short-term affordability of
existing medicines, particularly when dealing with emergency public
health situations.
The 2001 WTO Doha Declaration on TRIPS and Public Health is recognized
as a watershed event in this debate. The declaration states, in part,
that the TRIPS Agreement does not and should not prevent members from
taking measures to protect public health and, while reiterating a
commitment to the TRIPS agreement, that the TRIPS Agreement should be
interpreted and implemented in a manner supportive of WTO members'
right to protect public health and promote access to medicines for all.
Subsequently, in the United States, the Trade Act of 2002 granting
Trade Promotion Authority (TPA) to the President outlined three
principal trade negotiating objectives related to IP, one of which
referred to the Doha Declaration.[Footnote 1] The objectives were (1)
to promote adequate and effective protection of IP rights similar to
U.S. law, (2) to secure fair and equitable market access opportunities
as related to IP rights, and (3) to respect the Doha Declaration. Since
then, negotiations at the WTO continued through late 2005 in an effort
to resolve outstanding issues related to the Doha Declaration, and the
United States has negotiated 11 free trade agreements (FTA); several
are now being implemented. Some in Congress are concerned about how the
U.S. Trade Representative (USTR) has interpreted, pursued, and
implemented TPA principal IP objectives pertaining to the
pharmaceutical industry, particularly in light of the third objective
calling for respect for the Doha Declaration.
In response to your request, this report (1) describes the Doha
Declaration on TRIPS and Public Health and evaluates how the United
States and other key nations have interpreted its intent and meaning,
(2) analyzes how the United States has balanced respect for the Doha
Declaration with the other two IP negotiating objectives in negotiating
FTAs, (3) assesses the U.S. approach to overseeing the implementation
of pharmaceutical-related IP provisions in FTAs and other agreements,
and (4) evaluates the nature and extent of public health related agency
and private sector input into trade negotiations. You also expressed
interest in technical assistance on IP rights and public health that
U.S. agencies provide to foreign countries. Appendix II provides an
overview of U.S. technical assistance and technology transfer
activities.
To meet these reporting objectives, we performed reviews of agency
documentation and correspondence, WTO documents and meeting minutes,
academic studies, pharmaceutical industry and public health advocacy
group reports and position papers, and media reports. We examined the
text of the FTAs negotiated since the Trade Act of 2002 and compared
the language of the IP pharmaceutical provisions found in each FTA. In
addition, we examined trends and patterns found in USTR's annual
reports identifying foreign countries that deny adequate and effective
protection of IP rights. We traveled to Geneva, Switzerland, to meet
with officials from the U.S. Mission in Geneva, WTO, World Health
Organization (WHO), World Intellectual Property Organization (WIPO),
The Joint United Nations Program on HIV/AIDS, the Global Fund to Fight
AIDS, Tuberculosis and Malaria, as well as nongovernmental
organizations (NGO) from the pharmaceutical sector and public health
community. To evaluate the nature and extent of interagency input to
USTR from other executive branch agencies such as the Department of
State, Department of Health and Human Services (HHS), and Department of
Commerce, including the Patent and Trademark Office (PTO), we reviewed
documentation and interviewed officials. Regarding private sector
input, we interviewed agency officials and reviewed documents such as
formal advisory committee reports, responses to Federal Register
notices, and correspondence related to the trade advisory system.
Currently, there is ongoing litigation regarding the balance of
representation on certain trade advisory committees. In accordance with
GAO policy, we did not take any position on matters under litigation,
which in this case meant on the appropriateness of the current
composition of the trade advisory committees. Regarding technical
assistance, we interviewed agency officials and reviewed agency
documents. We also interviewed stakeholders to gather perspectives on
the range of issues involved, including pharmaceutical industry
representatives, public health groups, academics, and selected IP
experts; each had recently published or spoken on this issue. Access to
medicines is recognized as a complex issue driven by many factors,
including funding levels, infrastructure, and effective institutions,
which are addressed by various U.S. government programs and
international efforts. As agreed with your staff, we did not seek to
independently assess the actual or potential effect of these larger
U.S. trade efforts on public health and access to medicines.
See appendix I for a detailed discussion of our scope and methodology.
See appendix II for information about technical assistance on IP rights
and public health. We conducted our review from November 2006 through
September 2007 in accordance with generally accepted government
auditing standards.
Results in Brief:
The Doha Declaration on TRIPS and Public Health was adopted by WTO
members as a carefully crafted compromise among competing perspectives
that stresses the importance of implementing the TRIPS agreement in a
manner supportive of public health. Balancing the goals of promoting
both access to existing medicines and development of new medicines, it
was a separate declaration adopted at their Fourth Ministerial
Conference on November 14, 2001, in Doha, Qatar. The United States
interprets the declaration as a political statement that recognizes the
severity of public health crises while affirming the importance of IP
protection. It maintains that the declaration neither changes existing
TRIPS obligations nor creates new obligations, and does not assign
public health greater priority than IP protection. Instead, USTR says,
the declaration simply clarifies certain flexibilities already in TRIPS
for WTO members facing public health crises, including overriding
patents through the issuance of compulsory licenses under certain
circumstances. Supported to some extent by other developed countries
such as the European Union (EU) members, Japan, and Switzerland, USTR
recognizes these flexibilities as being allowed for WTO members,
including those facing public health crises, but only in a fashion that
will not unduly harm patent holders. Some developing countries believe
they provide broad discretion to ensure access to medicines when IP
regulations present barriers to addressing not only health issues, but
also social welfare. Differences between the United States and key
developing WTO countries such as Thailand, Brazil, and India over a
narrower versus a broader interpretation continued well after the 2001
declaration. Notably, in debate over how to help countries with little
or no manufacturing capacity in the pharmaceuticals sector take full
advantage of the flexibilities, controversy emerged over which members
should be eligible and for what diseases.
USTR maintains that it balances respect for the Doha Declaration with
TPA's other two IP negotiating objectives by actively promoting high
levels of IP protection related to pharmaceuticals while making
targeted allowances for Doha Declaration flexibilities for developing
country partners. USTR believes that this continuation of long-standing
U.S. pursuit of high IP protections for pharmaceuticals creates
incentives for investment in research and development of new
treatments, which in turn enhances public health. With regard to the
TPA objective to respect the Doha Declaration, USTR officials told us
that the key policy implication was to not insist upon two
pharmaceutical-related IP provisions it sees as relevant to the
Declaration with developing country trading partners. Otherwise, USTR
has continued to pursue a number of other pharmaceutical-related IP
protections that USTR does not consider related to the Doha
Declaration. Reactions to USTR's approach to its trade negotiations
have been mixed. The pharmaceutical industry considers these types of
FTA provisions to be crucial in preserving incentives for future
research and innovation. However, some academics, public health
experts, NGOs, and generic pharmaceutical producers have said such
provisions could delay entry of cheaper generic products onto the
market, thereby decreasing access to affordable medication and
violating the spirit and principles of the Doha Declaration. Several
Members of Congress have also expressed similar concern over the
pharmaceutical-related IP provisions in FTAs with developing countries,
and this concern was recently addressed through a bipartisan
compromise, between Congress and the administration, to revise, prior
to their submission to Congress, the last four FTAs concluded under
TPA.
USTR's approach to overseeing the implementation of pharmaceutical-
related IP provisions is consistent with its overall negotiating
approach in FTAs, which is to secure high levels of IP protection.
Following FTA negotiations, USTR rigorously oversees trading partner
implementation of pharmaceutical-related IP provisions, in order to
advise the President whether he can determine that the FTA partner has
taken the measures necessary to comply with the provisions of the FTA
that are to take effect on the date the FTA enters into force. In
addition, in its annual report detailing global IP challenges, USTR has
focused largely on the same pharmaceutical IP provisions concentrated
on during FTA negotiations, in keeping with its strategy of gaining
high levels of IP protection for pharmaceutical products, similar to
U.S. law. However, USTR has had a measured response to Thailand and
Brazil's recent usage of a TRIPS flexibility, compulsory licensing. For
example, when Thailand recently issued a compulsory license, USTR
acknowledged its right to do so, restricting its criticism to
commenting on a lack of transparency.
Input related to public health into U.S. trade negotiations has
remained limited since Congress enacted TPA. In negotiating trade
agreements under TPA, the President must seek advice and information
from executive departments and public and private sectors.[Footnote 2]
HHS and other agencies involved in the interagency trade policy process
generally endorse USTR's view that strong IP protection promotes public
health and access to medicines, but interagency input has been
primarily technical in nature. For instance, HHS, the lead U.S. health
agency, ensures that IP provisions related to pharmaceuticals in FTAs
do not violate U.S. law, but has not addressed policy-related
questions, such as whether FTA provisions might affect public health in
trading partner countries. Within the formal private sector trade
advisory system that plays a role under TPA in reviewing trade
agreements, a public health representative was recently added to 2 of
the 16 private sector industry trade advisory committees, after USTR
had concluded nine trade agreements. The two advisory committees that
the public health representatives were appointed to are respectively
composed of 20 and 33 private sector representatives from the
pharmaceutical and other industries. Although USTR has received limited
input on public health through the formal advisory system, the agency
has obtained some public health views through other formal and informal
means throughout the period, such as public hearings, Federal Register
comments, and written correspondence.
In this report, we suggest that Congress should consider this record as
it contemplates renewal of Trade Promotion Authority (TPA) and, if it
has concerns over USTR's approach to date, may wish to specify more
clearly its intentions for U.S. trade policy and input related to
balancing public health concerns and the negotiation of IP protections
in trade agreements.
Background:
By way of providing context for our examination of U.S. trade policy as
it relates to TPA guidance and the Doha Declaration on TRIPS and Public
Health, the following is an overview of ongoing U.S. government efforts
to address the wider issue of access to medicine and public health both
related and unrelated to IP, as well as how the WTO first became
involved in public health issues, and the origin of IP and public
health in TPA.
U.S. Government Has Addressed IP and Access to Medicine:
The U.S. government has supported innovation, competition, and access
to medicine. The Federal government, primarily through the National
Institutes of Health (NIH), conducts and supports medical research,
investing annually over $28 billion. About 55 percent of NIH's budget
supports basic research. While basic research may not have an immediate
impact on drug innovation, such "untargeted" research often ultimately
leads to developing new medicines and technologies.
In principle, U.S. intellectual protection laws are designed to support
innovation. Patents are considered to be especially valuable for
innovations in pharmaceuticals.[Footnote 3] According to the
pharmaceutical industry, IP protection is crucial to its ability to
offer new, innovative medicines. Research and development of new drugs
is very risky and time-consuming. The industry faces high fixed or
"sunk" costs associated with lengthy discovery and clinical trials.
Moreover, a large proportion of new drugs never make it to market due
to their lack of efficacy or inadequate safety. Thus, drug companies
seek a relatively high return on the medicines they do bring to market.
U.S. patents give companies a 20-year period during which they have an
exclusive right to make, sell, and use their invention.[Footnote 4]
They use this period when they cannot be undercut by competitors to
charge relatively higher prices, thus allowing them to recoup their
investments and earn profits. However, the effective life of a patent
is typically much shorter than this 20-year period, since the
preclinical and clinical testing phases necessary for securing FDA
marketing approvals can take more than a decade.
Public policy has also played a role in fostering generic competition
to hold down prices. Generic drugs--copies of brand-name drugs--can
enter the market after the brand-name's patent or other market
exclusivities expire and FDA approval is granted. Under the Hatch-
Waxman Act of 1984,[Footnote 5] generic manufacturers do not have to
repeat expensive research and clinical trials to obtain
approval.[Footnote 6] Instead, they only need to show the FDA that
their drugs are bioequivalent to the branded medicines.[Footnote 7]
Because they do not incur the same research and clinical trial
expenditures, generic firms can enter the market more quickly once
patents have expired and sell drugs at lower prices. Generic entry may
also put pressure on innovator companies to develop more new drugs.
Governments have also taken collective and individual steps to provide
medicines--particularly since 2001. At the global level, funds for
combating HIV/AIDS through the Global Fund to Combat AIDS, Tuberculosis
and Malaria, established in 2003, and UNAIDS, established in 1994, have
grown considerably since 2001. Among other things, the United States
established the President's Emergency Plan for AIDS Relief, or PEPFAR,
a 5-year, $15 billion initiative run by the Office of the Global AIDS
Coordinator at State, which has supported HIV prevention activities,
antiretroviral treatment and training, and HIV-related care and
training at more than 15,000 project sites primarily in 15 focus
countries, mainly in sub-Saharan Africa.[Footnote 8] More affluent
developing countries, such as Brazil and Thailand, have themselves been
taking more aggressive steps to combat AIDS and improve access,
including universal access schemes paid for with public funds.
Some of these government efforts have been undertaken with private
sector support. The research-based pharmaceutical industry has engaged
in private-public partnerships to address neglected diseases found in
poor countries, such as tuberculosis and malaria. Research-based
pharmaceutical companies have also instituted pricing schemes whereby
the same drug is sold at different prices, depending on the consumer's
or country's ability to pay. Ensuring that the supply remains in the
intended market, not resold elsewhere, is critical to this strategy's
success, but can be problematic. Governments have also supported
industry efforts to donate medicines outright--about $4.4 billion worth
of medicines and other medical help over the 2000-2005 period,
according to estimates by the London School of Economics.[Footnote 9]
Access to Medicines Remains a Global Challenge:
Despite government and industry initiatives, available data suggest
that many people currently lack access to existing medicines. According
to the World Health Organization (WHO), one third of the global
population does not have regular access to essential medicines. This
matters: WHO estimates that over 10.5 million lives a year could be
saved by 2015 by scaling up access to existing interventions for
infectious diseases, maternal and child health, and noncommunicable
diseases. Indeed, WHO says unaffordable prices of medicine and the need
for new medicines for diseases that disproportionately affect lower
income populations are among the primary challenges in expanding access
to medicines globally. According to WHO, in developing countries today,
medicines account for up to 70 percent of health care expenditure. This
compares to less than 15 percent in most high income countries, and
about 10 cents of every health care dollar spent in the United States
in 2005. Because of this imbalance in health care expenditure
worldwide, WHO's various projects on access to medicines and IP rights
continue.[Footnote 10] The Group of 8 Industrialized Nations, the
Organization for Economic Cooperation and Development (OECD), and the
United Nations Conference on Trade and Development (UNCTAD) are among
the other organizations that have also undertaken efforts to address
aspects of the issue.
IP and Pharmaceuticals Became Part of WTO at Its Inception in 1995:
The April 1994 Final Act Embodying the Results of the Uruguay Round of
Multilateral Trade Negotiations led to the establishment of WTO on
January 1, 1995. The Uruguay round was the product of long and complex
negotiations that not only liberalized manufactured goods trade in such
sectors as apparel, but also added IP and services rules and
obligations to the trading system. The WTO TRIPS Agreement was part of
the Uruguay Round's results and established minimum levels of
protection that each government has to give to IP of fellow WTO
members. The United States had fought hard to secure worldwide adoption
of minimum IP protection and enforcement standards through TRIPS as
home to the world's largest and most innovative pharmaceutical
industry. TRIPS extended patent protection for inventions of both
products and processes, while allowing certain exceptions, for at least
20 years. It also required WTO members, when requiring as a condition
of marketing approval the submission of undisclosed test data or other
data (such as data submitted to health authorities for regulatory
approval of pharmaceutical safety), the origination of which involves
considerable effort, to protect such data, against unfair commercial
use.[Footnote 11] When all of the WTO agreements took effect, developed
countries were given 1 year to ensure their laws and practices
conformed with TRIPS, but developing countries were given transition
periods of 5 or more years. Even so, many developing countries
complained about having to comply with the new requirements.
The HIV/AIDS Pandemic Put Access to Medicine in the Forefront for WTO:
The issue of IP and access to medicine came to a head at WTO in 2001
when the HIV/AIDS pandemic in sub-Saharan Africa was reaching
catastrophic levels. Separately, South Africa attempted to use its laws
to lower prices for imported medicines, but faced opposition from U.S.
and other drug companies that felt its actions compromised their
rights. Brazil and the United States, meanwhile, were in dispute over a
Brazilian law that could make exceptions to patents if products were
not manufactured in Brazil. Nongovernmental organizations (NGO) became
involved in discussing the implications of TRIPS to public health.
In April of 2001, WTO and the World Health Organization (WHO) jointly
sponsored a workshop on pricing and access to medicine. Initially, many
WTO members were skeptical about whether WTO was the proper forum for
the debate. However, this quickly changed when the African members
successfully pleaded their case for help in resolving the AIDS
pandemic, and WTO members subsequently devoted one day to the issue in
June 2001, then continued discussions throughout the summer of the same
year. Subsequently, the Declaration on the TRIPS Agreement and Public
Health was adopted at the fourth WTO Ministerial Conference in Doha,
Qatar, on November 14, 2001. As shown in figure 1, the Declaration on
TRIPS and Public Health was the first of three important decisions over
the next several years, all of which are discussed in detail later in
this report.
Figure 1: Timeline of Major WTO Events on IP and Public Health:
This figure is a chart showing a timeline of major WTO events on IP and
public health. The declaration on the TRIPS agreement and public health
was adopted on November 14, 2001. Several years later, there was the
implementation of paragraph 6 of the Doha declaration on the TRIPS
agreement and public health decision of August 30, 2003. Then in 2005,
the amendment of the TRIPS agreement occurred on December 6, 2005.
[See PDF for image]
Source: World Trade Organization.
[End of figure]
Congress Addressed IP and Public Health in Trade Promotion Authority
Legislation:
Shortly after WTO adopted the Declaration on TRIPS and Public Health,
Congress passed the Trade Act of 2002, which granted the President
Trade Promotion Authority (TPA) for reciprocal trade agreements to
liberalize U.S. trade with foreign nations. TPA contains guidance from
Congress concerning U.S. goals in negotiated trade agreements. One of
the three goals for IP specified in TPA, "to respect the Doha
Declaration on TRIPS and Public Health," was added in response to an
amendment by Senator Edward Kennedy. In his remarks about the
amendment, Senator Kennedy explained that the Declaration on TRIPS and
Public Health struck a balance between the legitimate interests of
intellectual property protection and the preservation of public health.
Senator Kennedy went on to assert that "[t]his amendment directs our
trade negotiators to support the declaration without
reservation."[Footnote 12] Senators Grassley and Baucus also asserted
their support for the amendment and emphasized the importance of IP
issues with respect to public health and innovation of new medicines.
Congress otherwise provided no guidance at the time on how to interpret
and apply this TPA objective. Recently, in response to the expiration
of the President's Trade Promotion Authority (TPA) on June 30, 2007,
before the Doha round of global trade talks had been successfully
concluded, there have been some calls to renew it.
The United States Has a Narrower Interpretation of the Doha Declaration
Than Some Other WTO Members:
To help address public health problems affecting many developing
countries, WTO members adopted the Doha Declaration (reprinted in full
below) to stress the importance of implementing the TRIPS agreement in
a manner supportive of public health.[Footnote 13] As part of a
carefully worded compromise among competing perspectives, this
statement was placed in the context of shared challenges and goals,
such as promoting both access to existing medicines and research into
and development of new medicines. The United States interprets the
declaration as a political statement recognizing public health crises
and affirming the importance of IP protection that neither changes
existing TRIPS obligations nor creates new obligations, and does not
assign public health greater priority than IP protection.
Significantly, the declaration clarifies certain flexibilities explicit
in TRIPS that allow WTO members to address public health crises. USTR
argues that these flexibilities should be applied judiciously and
subject to certain conditions specified in the TRIPS agreement. Some
developing countries, however, believe these flexibilities provide
broad discretion to ensure access to medicines when IP regulations
present barriers to addressing not only health issues, but also social
welfare. Differences over a narrower versus broader interpretations
continued long after the declaration. Notably, debate over how to help
countries with little or no pharmaceuticals manufacturing capacity take
full advantage of the flexibilities, including which members should be
eligible and for what diseases, became controversial.
Declaration on the TRIPS Agreement and Public Health:
1. We recognize the gravity of the public health problems afflicting
many developing and least-developed countries, especially those
resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.
2. We stress the need for the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS Agreement) to be part of the wider
national and international action to address these problems.
3. We recognize that intellectual property protection is important for
the development of new medicines. We also recognize the concerns about
its effects on prices.
4. We agree that the TRIPS Agreement does not and should not prevent
members from taking measures to protect public health. Accordingly,
while reiterating our commitment to the TRIPS Agreement, we affirm that
the Agreement can and should be interpreted and implemented in a manner
supportive of WTO Members' right to protect public health and, in
particular, to promote access to medicines for all.
In this connection, we reaffirm the right of WTO Members to use, to the
full, the provisions in the TRIPS Agreement, which provide flexibility
for this purpose.
5. Accordingly and in the light of paragraph 4 above, while maintaining
our commitments in the TRIPS Agreement, we recognize that these
flexibilities include:
a. In applying the customary rules of interpretation of public
international law, each provision of the TRIPS Agreement shall be read
in the light of the object and purpose of the Agreement as expressed,
in particular, in its objectives and principles.
b. Each Member has the right to grant compulsory licenses and the
freedom to determine the grounds upon which such licenses are granted.
c. Each Member has the right to determine what constitutes a national
emergency or other circumstances of extreme urgency, it being
understood that public health crises, including those relating to HIV/
AIDS, tuberculosis, malaria and other epidemics, can represent a
national emergency or other circumstances of extreme urgency.
d. The effect of the provisions in the TRIPS Agreement that are
relevant to the exhaustion of intellectual property rights is to leave
each Member free to establish its own regime for such exhaustion
without challenge, subject to the MFN and national treatment provisions
of Articles 3 and 4.
6. We recognize that WTO Members with insufficient or no manufacturing
capacities in the pharmaceutical sector could face difficulties in
making effective use of compulsory licensing under the TRIPS Agreement.
We instruct the Council for TRIPS to find an expeditious solution to
this problem and to report to the General Council before the end of
2002.
7. We reaffirm the commitment of developed-country Members to provide
incentives to their enterprises and institutions to promote and
encourage technology transfer to least-developed country Members
pursuant to Article 66.2. We also agree that the least-developed
country Members will not be obliged, with respect to pharmaceutical
products, to implement or apply Sections 5 and 7 of Part II of the
TRIPS Agreement or to enforce rights provided for under these Sections
until 1 January 2016, without prejudice to the right of least-developed
country members to seek other extensions of the transition periods as
provided for in Article 66.1 of the TRIPS Agreement. We instruct the
Council for TRIPS to take the necessary action to give effect to this
pursuant to Article 66.1 of the TRIPS Agreement.
The Doha Declaration Addresses Flexibilities in TRIPS That Can Be Used
to Deal with Public Health Crises:
In the wake of the HIV/AIDS crisis at the time, some WTO members were
concerned about the extent to which the TRIPS agreement allowed them to
address public health needs. The African members known as the African
Group were among the members pushing for clarification. WTO members
formally addressed this issue in the main Doha Ministerial Declaration
and their intention to adopt a separate declaration, as shown below.
Ministerial Declaration - Fourth Session November 2001:
Paragraph 17:
We stress the importance we attach to implementation and interpretation
of the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS Agreement) in a manner supportive of public health, by
promoting both access to medicines and research and development into
new medicines and, in this connection, are adopting a separate
Declaration.
The Doha Declaration is divided into seven paragraphs. Paragraphs one
through four are general principles that WTO members agreed to that
describe the relationship between IP rights and public health.
Paragraph five lays out specific flexibilities provided in TRIPS that
can be used by WTO members to address public health related problems.
Below is a summary of these flexibilities:
5(a) that each provision in TRIPS should be read in light of the
agreement's objectives and principles;
5(b) the right to grant compulsory licenses. The WTO fact sheet on
TRIPS and pharmaceuticals describes the term compulsory licensing as
when a government allows someone else to produce the patented product
or process without the consent of the patent owner--in this case in
reference to pharmaceuticals, but it could also apply to patents in any
field.[Footnote 14]
5 (c) the right to determine what is a national emergency; and:
5 (d) the right to establish an exhaustion regime without challenge.
The WTO fact sheet on TRIPS and pharmaceuticals describes the term
exhaustion as a legal principle consisting of the idea that once a
company (patent holder) has sold a batch of its product, its patent
distribution rights are exhausted with respect to that batch, and it no
longer has any rights to control distribution of that batch. Exhaustion
is the legal principal behind parallel imports. [Footnote 15]
WTO members appear to agree that the TRIPS and Public Health
declaration makes no change to TRIPS itself. However, two changes are
foreshadowed. Specifically, paragraphs six and seven calls upon WTO
members to take future action in specific areas. Paragraph six mandates
WTO members to resolve a potential problem with regard to compulsory
licensing by WTO members with insufficient or no pharmaceutical
manufacturing capacities. Because TRIPS specifies that a country may
only compulsory license primarily for supplying the domestic market,
countries with little or no manufacturing capacity (and therefore no
domestic company to which the government could grant a compulsory
license) could face difficulties in effectively using compulsory
licensing. They must import their medicines, but the supplier (the
exporter) would be prevented under TRIPS from exporting them the
patented medicines under a compulsory license if the product was
patented in its territory. Paragraph seven instructs WTO members to
take the steps necessary to extend the deadline from for least
developed countries to implement their TRIPS obligations with respect
to pharmaceutical products to 2016.[Footnote 16]
The United States Has a Narrower Interpretation of the Declaration Than
Some Other WTO Members:
The United States believes that the declaration does not change
existing TRIPS obligations or create new rights, nor does it give
public health greater priority than IP protection. Overall, leading up
to Doha and since, the United States has consistently opposed creating
broader exemptions to TRIPS to protect public health, but instead has
called for permitting targeted exceptions to TRIPS to avoid eroding
patent protections that it deems necessary for research and development
of medicines to treat life-threatening diseases. Some developing
countries had wanted to modify TRIPS provisions if they were considered
insufficient to protect public health.
According to a USTR official, paragraph four of the declaration-"The
TRIPS agreement does not and should not prevent members from taking
measures to protect public health."--does not provide a broad exception
in TRIPS for public health purposes and in addition, the provision
should be considered in context with the rest of the declaration. Some
developing countries had originally called for the declaration to have
stronger language-"Nothing in the TRIPS agreement should prevent
Members from taking measures to protect public health."-in an attempt
to make the declaration legally binding.
With regard to paragraph five, which enumerates flexibilities in TRIPS
that may be used to address public health, the United States supports
the view that these flexibilities preserve the ability of members to
formulate public health policies while also maintaining effective
patent systems. But some developing countries see paragraph five as
providing broader discretion to address public health. For example, a
group of developing countries, including the African Group, Brazil,
India, and Thailand, has maintained that there should be a common
understanding that confirms the right of governments to ensure access
to medicines at affordable prices and to make use of TRIPS provisions
whenever the scope or exercise of IP regulations results in barriers to
access to medicine. These members believe that TRIPS objectives and
principles (referred to in the last phrase in paragraph five (a) of the
declaration) support the view that TRIPS protections are and should be
contingent on IP rights contributing to social goals, such as nutrition
and social and economic welfare. (TRIPS objectives and principles are
found in articles 7 and 8 respectively, shown below).
TRIPS Article 7 - Objectives:
The protection and enforcement of intellectual property rights should
contribute to the promotion of technological innovation and to the
transfer and dissemination of technology, to the mutual advantage of
producers and users of technology knowledge and in a manner conducive
to social and economic welfare, and to a balance of rights and
obligations.
TRIPS Article 8 - Principles:
Members may, in formulating or amending their laws and regulations,
adopt measures necessary to protect public health and nutrition, and to
promote the public interest in sectors of vital importance to their
socio-economic and technological development, provided that such
measures are consistent with the provisions of this Agreement.
Appropriate measures, provided that they are consistent with the
provisions of this Agreement, may be needed to prevent the abuse of
intellectual property rights by right holders or the resort to
practices which unreasonably restrain trade or adversely affect the
international transfer of technology.
The United States has maintained that, rather than impeding access to
medicines, patent regimes meet the objectives of article 7 by
contributing to the promotion of technological innovation and
dissemination of technology. Furthermore, the United States has argued
that the final clause in article 8-"provided that such measures are
consistent with the provisions of [the TRIPS ]Agreement"-precluded
article 8 from providing such a broad exception to the obligations of
TRIPS. The European Union (EU), Switzerland, and Japan were concerned
that the countries were suggesting the ability to make significant
exceptions to patent protection under TRIPS.
The interpretation of paragraph five (b) on compulsory licensing has
sparked the most controversy among WTO members. The WTO fact sheet on
TRIPS and pharmaceuticals describes the declaration as affirming
compulsory licensing [as a TRIPS flexibility] as part of its overall
attempt to strike a balance between promoting access to existing drugs
and promoting research and development into new drugs.[Footnote 17]
Significantly, the declaration clarifies that WTO members can determine
the grounds for issuing a compulsory license. This is because TRIPS
does not specifically list the reasons that might be used to justify
compulsory licensing, but rather enumerates a number of conditions for
doing so.[Footnote 18]
During the debate over the declaration, the United States stressed
that, while it considered compulsory licensing to sometimes be
appropriate, it believed its widespread use for any purpose could have
negative implications for the patent system and, more importantly, for
the availability and development of new drugs. Moreover, the United
States argued using compulsory licensing as a mechanism for directing
industrial policy or protecting domestic industries against foreign
competition would be contrary to the letter and purpose of TRIPS.
In addition, USTR emphasizes that while the declaration is clear that
members can determine the grounds for compulsory licensing, they still
must meet certain conditions articulated in TRIPS article 31. These are
aimed at protecting the legitimate interests of the patent holder when
circumstances allow compulsory licensing and government use of a patent
without the authorization of the patent holder. Summarized below are
some relevant excerpts from selected article 31--"Other use without
authorization of the patent holder"--provisions, including important
exceptions in recognition of the fact that time can be of the essence
in some situations, such as national emergencies. Basically, with some
exceptions, whoever issues a compulsory license must first inform the
patent holder and seek to obtain authorization (voluntary license) from
the patent holder. In all cases, they must remunerate the patent
holder.
Summaries of article 31(b) (h) (k) provisions:
* Prior to use, user makes effort to obtain authorization from the
patent holder on reasonable commercial terms and conditions within a
reasonable period of time.
* Above authorization requirement may be waived in cases of:
- national emergency or other circumstances of extreme urgency:
- public noncommercial use:
- to correct anticompetitive practices as determined by judicial or
administrative processes.
* Patent holder shall be:
- notified as soon as reasonably practicable in case of national
emergency:
- informed promptly in case of noncommercial use:
* Patent holder shall receive adequate remuneration.
Some developing countries, including the African Group, Brazil, India,
and Thailand, expressed the view that the TRIPS agreement in no way
stands in the way of public health protection, and therefore that it
should provide the broadest flexibility for the use of compulsory
licensing to obtain lower cost medicines. Differences over compulsory
licensing have continued to reemerge, including later during the later
debate over how to resolve the paragraph six problem.
Finally, the United States and some WTO members have different
interpretations of paragraph five (d), which says that TRIPS leaves
each member free from challenge to establish its own exhaustion regime,
based on TRIPS article 6 (shown below).
TRIPS Article 6 - Exhaustion:
For the purposes of dispute settlement under this Agreement, subject to
the provisions of Articles 3 and 4, nothing in this Agreement shall be
used to address the issue of the exhaustion of intellectual property
rights.
The United States stated during the debate leading up to the
declaration that it did not interpret this to mean that TRIPS permits
parallel imports,[Footnote 19] and expressed misgivings about their
use. To be specific, USTR pointed out that permitting parallel imports
inhibits the patent holder's willingness to offer prices differentiated
according to countries' ability to pay. This is because, when prices
are higher in one country than in others, there is a tendency for
diversion to higher income countries. These are precisely the markets
where patent owners want to maintain high prices in order to recoup
costs and earn the profits that fund future research. This differential
pricing has been a key feature of pharmaceutical industry efforts to
promote improved access to medicine since the Doha Declaration.
In contrast to the U.S. position, some developing countries, including
the African Group, Brazil, India, and Thailand, called parallel
importation a significant way of increasing access to medicines,
particularly for developing countries, and a relevant tool when
compulsory licenses may be ineffective.
Differences over a Narrower Versus a Broader Approach Continued in
Debating the 2003 and 2005 Council Decisions:
Differences over whether the use of compulsory licensing should be
restricted or widespread continued during the subsequent debate leading
up to the 2003 Council Decision on the Implementation of Paragraph Six.
The United States believed that situations requiring a compulsory
license for export (sometimes referred to as the "paragraph six
solution") would likely be somewhat limited but emphasized that the
grave health problems faced by certain developing and least developed
countries made a solution imperative. The United States called for
restricting compulsory licensing for export to a narrower set of
scenarios to ensure that only countries facing genuine crises and with
no effective manufacturing capacity could use it. WTO members disagreed
about the legal means to address paragraph six and its scope and
coverage, including which members should participate in the solution
and for what diseases.
USTR Maintained Paragraph Six Would Be Less Applicable in the Near
Term:
During deliberations in 2001 leading up to the Declaration, the United
States maintained that situations requiring a paragraph six solution
would likely remain somewhat limited in the near term, but recognized
that the grave health problems faced by certain developing and least
developed countries foreshadowed serious consequences should they
occur. First, difficulties falling under paragraph six would only be
expected to arise when pharmaceuticals were not provided by the patent
holder through normal commercial arrangements or through discount,
donation, or other aid programs. In addition, a paragraph six solution
would only apply if a patent existed in the WTO member country or
territory that was exporting the pharmaceutical. However, some
developing countries at the time were not obligated to provide patents
until January 2005, most notably India.[Footnote 20]
WTO Members Differed on the Legal Means to Address Paragraph Six:
The legal mechanism by which to address paragraph six could also affect
the widespread use of compulsory licensing and the effective force of
TRIPS obligations. WTO members had to decide whether to craft the
paragraph six solution on the basis of TRIPS article 30 or on a waiver
of article 31. The United States and the EU supported article 31. The
United States argued that a targeted moratorium or waiver of
obligations of TRIPS article 31(f) (see below) was the most
expeditious, workable, transparent, sustainable, and legal solution.
Essentially, the TRIPS requirement that compulsory licensing should be
primarily for domestic use would be waived.
TRIPS Article 31:
"Other use without authorization of the patent holder"
Where the law of a Member allows for other use of the subject matter of
a patent without the authorization of the right holder, including use
by the government or third parties authorized by the government, the
following provisions shall be respected:
Article 31 (f): Any such use shall be authorized predominantly for the
supply of the domestic market of the Member authorizing such use;
The African Group also supported the article 31 approach and had laid
out several options for doing so. Above all, however, they said that
they wanted an expeditious solution. According to WTO officials, there
was a tacit agreement among the WTO members that the African Group "had
the moral high ground" on this issue because the HIV/AIDS pandemic was
so acute in Africa.
Alternatively, countries such as Brazil, India, and Thailand argued
that the best solution was to interpret TRIPS article 30 (see below) so
as to recognize the right of WTO members to authorize third parties to
make, sell, and export patented public-health-related products, without
the consent of the patent holder to address the public health needs in
another country. These acts would be considered "limited exceptions to
the exclusive rights" conferred by patents. The countries argued that
an authoritative interpretation of article 30 would also have the
advantage of avoiding the potentially cumbersome requirement under a
waiver of article 31(f) that the exporting country must also grant a
compulsory license as well as change its own laws to allow compulsory
licensing for exporting.
TRIPS Article 30:
Members may provide limited exceptions to the exclusive rights
conferred by a patent, provided that such exceptions do not
unreasonably conflict with a normal exploitation of the patent and do
not unreasonably prejudice the legitimate interests of the patent
owner, taking account of the legitimate interests of third parties.
USTR contended that such a broad reinterpretation of article 30
allowing members to amend their patent laws to permit compulsory
licenses would unreasonably conflict with patent owners' normal
exploitation of patents and with their legitimate interests.
Furthermore, unlike article 31, article 30 contains no procedural
safeguards, such as requirements for notifying a patent owner of use,
establishing terms and conditions, or remuneration to the patent
holder. USTR stated that creating an exception through article 30 was
hard to defend legally as being consistent with TRIPS. Moreover, it
contended that there was too much danger that such an exception would
be misused and thus subject to dispute settlement challenge.
WTO Members Disagreed on Countries Covered under Paragraph Six:
The question of which countries should be able to take advantage of a
paragraph six solution also provoked controversy. Basically, the United
States and other WTO members with large name-brand pharmaceutical
industries, including the EU and Switzerland, wanted the paragraph six
solution to focus on developing and least developed countries lacking
pharmaceutical manufacturing capacity as importing beneficiaries. The
United States wanted to establish specific procedures to clarify which
developing country members could be considered to have insufficient or
no manufacturing ability, and thought it inappropriate to extend the
solution to developed countries or to countries that had manufacturing
capacity but chose not to manufacture certain drugs based on policy,
economic, or other reasons. WTO officials told us they tried to collect
data on manufacturing capability, but could find none. Ultimately, the
2003 Council Decision required importing countries to explain how they
had no or insufficient manufacturing capacity for the product in
question.
After facing strong resistance from other WTO members, the United
States did not insist on a specific list of eligible countries.
However, the United States maintained that not every member country
should be able to use a paragraph six solution, and suggested that some
members, such as OECD countries and certain developing countries opt
out. WTO officials told us that the United States put pressure on many
countries to opt out. In the end, 23 developed countries agreed to opt
out, and the 10 countries soon to join the EU partially opted out, with
agreement to opt out completely after they joined the EU. Finally, some
other WTO members agreed that they would only use the system as
importers in situations of national emergency or other circumstances of
extreme urgency.[Footnote 21]
United States Had Difficulty Joining Consensus on Paragraph Six
concerning Diseases:
The other controversial issue was the scope of diseases to be covered
under paragraph six of the declaration. In November and December 2002,
the United States said that it was willing to join the consensus on all
of a paragraph six solution draft except for language on the scope of
diseases. The United States, the EU, and Japan wanted coverage limited
to the diseases mentioned in paragraph one of the declaration, namely
"HIV/AIDS, TB, malaria and other epidemics" of potentially pandemic
proportions. Others, including Brazil and Argentina, disagreed and
wanted no restrictions on diseases. According to WTO officials, some
WTO members discussed using either paragraph one or paragraph four-
"access to medicine for all"-of the declaration to address the scope of
diseases, and settled on the former after being reassured that the
declaration did not restrict itself to specific diseases. According to
WTO officials, in April 2003, the new TRIPS Council Chair, Singapore,
conferred with the United States and the U.S. pharmaceutical industry,
drafted a new paragraph six text, and led negotiations among a few
members--namely, South Africa, Kenya, Brazil, India, and the United
States. USTR officials noted that this group of countries represented
the spectrum of views on this debate. The final text contained no
specifics on diseases, but relied on paragraph one of the declaration.
The Chairman's Statement Was a Key Condition to U.S. Support of the
Paragraph Six Solution:
USTR officials emphasized that the United States ultimately conditioned
its consensus with a paragraph six solution on a statement by the
chairman of the General Council that signaled that diversion was a key
issue.[Footnote 22] WTO members generally agreed diversion should be
prevented to ensure that drugs provided under the paragraph six
solution went where intended. The separate statement by the General
Council chairman was designed to alleviate fears that the decision
might be abused and undermine patent protection or not effectively
prevent drugs from being diverted. The General Council chairman stated
that, before adopting the decision, he wanted to place on the record
"this Statement which represents several key shared understandings of
Members regarding the Decision to be taken and the way in which it will
be interpreted and implemented." He went on to state that members
recognize that the purpose of the decision would be defeated if
products were diverted from the markets for which they were intended,
and that all reasonable measures should be taken to prevent such
diversion. In addition, the chairman listed the WTO members that had
agreed to opt out of using the system as importers.
USTR Believes the 2003 Council Decision Was a Positive One, but Some
WTO Members Have Expressed Concerns since the Decision:
Ultimately, the outcome of the nearly 2-year debate over a paragraph
six solution was the adoption of the 2003 General Council Decision in
light of the General Council chairman's statement. The decision waived
the prohibition in TRIPS article 31(f) against exporting under a
compulsory license to countries that cannot manufacture the
pharmaceuticals themselves. USTR officials told us they considered it a
positive outcome in that it provided a solution to the problem
identified in paragraph six of the Doha Declaration, while preserving
TRIPS rules and obligations.
Other WTO members initially supported the outcome, but expressed some
concern later. For example, the African Group suggested at a March 2005
meeting of the WTO TRIPS Council that the burden of using the decision
was the reason why, up to that point, the 2003 Council Decision had not
been used by a country to waive TRIPS rules and import generic versions
of patented drugs under a compulsory license. One WTO representative
told us more recently that he considered the waiver too complicated,
calling the packaging and labeling requirements costly and draconian
because of the need to change production lines.
Under the waiver, countries can produce generic copies of patented
products under compulsory licenses to export to eligible importing
countries, subject to certain requirements and safeguards. The terms of
the waiver are summarized below:
Importing members:
* Notify TRIPS Council: names, expected quantities, of drug.
* Other than least developed countries, establish insufficient or no
manufacturing capacities for the product in question.
* Take reasonable measures within their means, with possible assistance
from developed country members, to prevent exportation elsewhere
(diversion).
* If product is patented in its territory, must grant or intend to
grant a compulsory license in compliance with TRIPS Article 31.
- Remuneration waived if product is provided by exporting country.
- Make a determination of a national emergency, other circumstances of
extreme urgency, or a case of public noncommercial use.
Exporting members:
* Export only amount necessary to meet needs of eligible importing
member.
* Export entirety of product produced under compulsory license to the
eligible importing member(s) that has notified the TRIPS Council.
* Label product to identify it as being produced under the system
established by the decision.
- Package and color uniquely, provided such distinction is feasible and
does not significantly affect price.
* Publicize on a designated Web site distinguishing features and
quantities of medicine exporting.
* Notify TRIPS Council: name of licensee, products, country to be
supplied, and duration of license.
* Adequately remunerate patent holder in the exporting member.
All WTO members:
* Ensure the availability of effective legal means to prevent the
importation of products produced under the system established by the
decision and diverted to their markets.
According to USTR, in July 2004, the United States and Canada agreed to
suspend applications, as between themselves, of a provision of the
North American Free Trade Agreement (NAFTA) that parallels Article 31
(f) of the TRIPS agreement in order to ensure that Canada could export
drugs under the terms of the 2003 Council Decision without violating
NAFTA. The first and only WTO member to date to notify the WTO TRIPS
Council of its intent to use a paragraph six solution was Rwanda, in
July 2007.
General Council Issued 2005 Decision to Consider Amending the TRIPS
Agreement, after Some Difficulties:
Debate at the WTO over the 2003 Council Decision still continued for
another 2 years. In response to a call by some WTO members, principally
driven by the African Group, to express the 2003 Council Decision in an
amendment to TRIPS as a more permanent solution, the 2003 Decision also
called for WTO members to prepare an amendment to replace the decision.
As a result, the General Council issued a decision on December 6, 2005,
adopting a protocol amendment that is open for members to accept. It
will become effective once the amendment is accepted by two thirds of
the WTO membership. Thus far, eight WTO members have accepted the
amendment, including the United States, Switzerland, El Salvador, the
Republic of Korea, Norway, India, the Philippines, and Israel.
The drafting of the amendment turned into another 2-year struggle.
According to USTR, the United States wanted to ensure that agreements
made under the 2003 Council Decision were not changed in the amendment.
To do this, USTR proposed to include the chairman's statement as a
footnote to the amendment. WTO members discussed the possible legal
weight of a footnote. According to USTR, some members felt attaching
the chairman's statement as a footnote might give it too much legal
weight. In addition, some members wanted to make changes to the
original 2003 Decision in the amendment. Eventually, the footnote was
dropped and the members agreed to have the chairman's statement read
orally, similar to the scenario followed in adopting the 2003 Council
Decision. Despite losing the footnote, the United States believed it
had achieved the delicate balance of preserving the solution agreed to
under the 2003 Council Decision while promoting access to medicine with
safeguards against diversion.
USTR Has Maintained Its Pursuit of High IP Standards and Made Some
Allowances for Doha Flexibilities in Negotiating FTAs:
In negotiating FTAs, USTR said it balances respect for the Doha
Declaration with its other two IP negotiating objectives in TPA by
consistently promoting high standards of IP protection similar to U.S.
law, while making allowances for the two specific flexibilities
mentioned in the declaration. For example, USTR makes concessions to
developing countries on compulsory licensing and parallel importing
provisions specifically cited in the declaration. However, USTR has
continued to pursue other pharmaceutical-related IP provisions that it
does not see as relevant or contrary to the Doha Declaration in all of
its FTAs, such as data exclusivity, patent term extensions, and patent
linkage. Reactions to USTR's approach have been mixed. The
pharmaceutical industry supports the inclusion of these protections in
FTAs because it believes they are central to maintaining incentives for
investment in research and development of new drugs. Some experts and
public health advocates have raised concerns that USTR's approach
hinders generic competition, reducing access to medicines and thus
violating the principles of the declaration. Finally, certain Members
of Congress have expressed concern over the pharmaceutical-related IP
provisions in FTAs with developing countries, and this concern was
recently addressed through a bipartisan compromise between Congress and
the administration.
USTR Believes That Strong IP Protection and Increased Market Access
Promotes Public Health, and Thus Respect for the Doha Declaration:
USTR has three principal negotiating objectives related to IP rights
when negotiating FTAs with other countries. The Trade Act of 2002,
which granted the President Trade Promotion Authority (TPA), contains
guidance from Congress on U.S. negotiating objectives for trade
agreements, including three goals on IP rights:[Footnote 23]
1. to further promote adequate and effective protection of IP rights,
including through ensuring that the provisions of any multilateral or
bilateral trade agreement governing IP rights that is entered into by
the United States reflect a standard of protection similar to that
found in United States law;
2. to secure fair, equitable, and nondiscriminatory market access
opportunities for United States persons that rely upon IP protection;
and:
3. to respect the Doha Declaration on the TRIPS Agreement and Public
Health, adopted by the World Trade Organization (WTO).
USTR officials explained that USTR believes it can simultaneously
pursue policies that advance the first two objectives of promoting IP
rights and securing market access, while fulfilling the third objective
to respect the Doha Declaration. Specifically, the officials noted that
in order to pursue the first two objectives in FTAs, USTR officials
have negotiated high levels of IP protection in FTAs that reflect
standards of protection similar to U.S. law, and build on the minimum
standards in TRIPS. USTR officials stated that they pursue the second
objective of securing market access for persons who rely on IP
protection by ensuring that products benefit from the increased
protection and market access in the FTAs. For example, USTR officials
noted that FTAs with more developed countries have regulatory
provisions for pharmaceuticals and medical devices on market approval,
price controls, and reimbursement policies. USTR sees no inherent
conflict between active pursuit of TPA's first two objectives of
promoting IP protection similar to U.S. law and market access
opportunities, and the third objective of respecting the Doha
Declaration, but rather considers these objectives complementary. USTR
officials stated that USTR's view is that IP rights ultimately enhance
public health by promoting innovation for new medicines and that
therefore this approach is consistent with the Doha Declaration.
USTR Pursues a Menu of Pharmaceutical-Related IP Provisions in FTA
Negotiations:
In response to the objectives laid out in TPA, USTR officials noted
that they have pursued a menu of pharmaceutical-related IP provisions
in its FTAs, including restrictions on compulsory licensing and
parallel imports, and requirements to provide data exclusivity, patent
term extensions, and patent linkage. Some of these pharmaceutical-
related IP provisions go beyond the minimum levels of protection
outlined in TRIPS, provoking complaints from some that they violate the
principles and spirit of the Doha Declaration. However, USTR considers
them consistent with its interpretation of the declaration's intent and
meaning and with TPA guidance.
The FTA pharmaceutical-related IP provisions, to the extent that they
are similar across the FTAs, have been summarized below. However, it is
important to note that variations across the provisions exist and have
not been presented in these summaries. Moreover, not every FTA reviewed
contained every provision summarized below.
Compulsory Licensing: Generally, provisions on compulsory licensing
limit the ability of a country to issue a compulsory license to a few
specific scenarios: to remedy anticompetitive practices in cases of
public noncommercial use, in cases of national emergency, or other
circumstances of extreme urgency.
Parallel Imports: Generally, provisions on parallel importation require
the country to preserve the patent owner's exclusive right to sell or
import its product in the country in a variety of contexts.
Data Exclusivity: Generally, data exclusivity provisions state that a
generic company cannot obtain marketing approval based on the safety
and efficacy data of the innovator company for a period of at least 5
years from the date marketing approval was granted to the innovator.
Thus, this provision provides the innovator 5 years of effective
marketing exclusivity, unless the generic firm produces its own safety
and efficacy data with new drug trials.
Patent Term Extensions: Generally, patent term extension provisions
require the country to provide a patent term extension to the patent
owner to compensate for unreasonable delays in granting the patent, or
for unreasonable curtailment of the effective patent term as a result
of the marketing approval process.
Patent Linkage: Generally, provisions on patent linkage establish a
relationship between the market approval process of generic drugs and
the patent status of the originator product. Under this relationship,
the governmental body responsible for granting market approval prevents
third parties from making or selling copies of patented products
without the authorization of the patent holder by withholding marketing
approval until either the expiration of the patent or a determination
by a governmental body, either executive or judicial, that the patents
are either not infringed, invalid or unenforceable. In addition, the
identity of the generic company requesting marketing approval must be
made available to the patent owner.
Patent term extensions and patent linkage are two examples of
pharmaceutical-related IP provisions the United States negotiates for
in FTAs that go beyond the minimum obligations in the TRIPS agreement.
TRIPS article 33, which lays out the term of protection for a patented
product, states that "the term of protection available shall not end
before the expiration of a period of twenty years counted from the
filing date." There is no mention of patent term extensions to make up
for delays in the patent or marketing approval process in the TRIPS
agreement. Nevertheless, these patent term extension provisions exist
in U.S. law[Footnote 24] and according to USTR officials are negotiated
by USTR in FTAs. In addition, there is no mention of coordination
between the health regulatory authority and the patent granting office,
known as patent linkage, in the TRIPS agreement. However, U.S. law does
establish linkage between the FDA drug approval process of generics and
the patent status of the originator product,[Footnote 25] and USTR
believes that such linkage is important to restrict marketing of
infringing copies of patented drug products.
Whether FTA provisions on data exclusivity go beyond TRIPS is less
clear. TRIPS article 39(3) states that members who require the
submission of undisclosed test data as a condition of marketing
approval for a pharmaceutical or agricultural chemical product shall
protect the data from unfair commercial use and disclosure.
TRIPS Article 39(3):
Members, when requiring, as a condition of approving the marketing of
pharmaceutical or of agricultural chemical products which utilize new
chemical entities, the submission of undisclosed test or other data,
the origination of which involves a considerable effort, shall protect
such data against unfair commercial use. In addition, Members shall
protect such data against disclosure, except where necessary to protect
the public, or unless steps are taken to ensure that the data are
protected against unfair commercial use.
There are different interpretations of the obligations under TRIPS
39(3), and exactly what practices can be considered a fulfillment of
this obligation. One interpretation of TRIPS 39(3) requires members to
grant the originator of the data a period of exclusive use similar to
that provided by data exclusivity laws in the United States. Under this
interpretation, FTA provisions do not go beyond TRIPS. Others do not
believe that Article 39(3) of TRIPS confers exclusive rights, but
instead simply requires countries to prevent third parties from using
the originators' data for unfair commercial purposes. This
interpretation suggests that the FTA provision goes beyond the TRIPS
requirement.
USTR Has Made Limited Concessions on Doha Declaration Flexibilities:
USTR officials stated that they did not change the initial demands USTR
makes in FTA negotiations as a result of the Doha Declaration. However,
they argued that USTR follows TPA guidance to respect the Doha
Declaration by making concessions during negotiations with what it
considers to be developing countries on the two TRIPS flexibilities
specifically mentioned in the declaration. USTR officials told us that
when developing country trading partners raise concerns during FTA
negotiations about provisions that would restrict the use of parallel
imports or compulsory licensing, USTR ultimately backs off and removes
them from the proposed text; however, they stated that no such
concessions were made for countries that USTR considered developed
countries. A USTR official said that developed countries have more
tools and resources with which to deal with public health situations
and that they should not have to revert to such extraordinary measures
outside of the cases specified in FTA provisions, such as national
emergencies. Restricting these concessions to developing countries is
in line with USTR's belief that the Doha Declaration is intended to
apply primarily to developing countries with limited resources.
USTR also attaches side letters on public health to FTAs with
developing countries.[Footnote 26] Our analysis in figure 2 shows that
7 of the 11 agreements include a side letter or understandings on
public health.[Footnote 27] USTR officials noted that they use the side
letters to further clarify that the provisions of the agreement leave
intact a series of methods a country can use to respond to public
health emergencies.[Footnote 28] However, according to a USTR official,
these side letters do not create exceptions to the provisions in the
FTA.
Figure 2: FTA Pharmaceutical-Related IP Provisions and Side Letters
Matrix:
This figure is a chart showing the FTS pharmaceutical-related IP
provisions and side letters matrix.
[See PDF for image]
Source: GAO analysis, International Monetary Fund, (IMF), and United
Nations (UN).
Note: Per capita income based on purchasing power parity (PPP) exchange
rate is from International Monetary Fund's staff estimates for 2006.
Per capita income for CAFTA-DA is an average for the region, which is
total PPP-based Gross Domestic Product (GDP) for the region divided by
total population for the region using UN estimates.
[End of figure]
USTR told us that some differences in the IP provisions among FTAs
represented accommodations made to countries raising specific concerns
during negotiations. For instance, USTR officials stated that, in the
Central America-Dominican Republic-United States Free Trade Agreement
(CAFTA-DR), a transition period was included for the implementation of
patent term extensions. In the CAFTA-DR agreement, USTR dropped a
proposal for data exclusivity protection on new uses of previously
discovered chemical entities, and instead left data exclusivity in
place only for new chemical entities. In addition, USTR revised the
proposed provision on patentable subject matter in the Oman agreement
in order to exclude plants and animals from patent protection in
response to Oman's concerns. USTR officials said that most concerns
raised during negotiations regarding data exclusivity and patent
linkage were not couched as health concerns, but rather as unease
related to administrative burden or implementation concerns. When these
types of implementation concerns are raised during negotiations, USTR
said it consults with the U.S. agencies responsible for implementing
those provisions in the United States, PTO, and FDA.
USTR officials stated that USTR considers the remaining pharmaceutical
IP provisions on data exclusivity, patent linkage, and patent term
extension a central part of its strategy of pursuing the first two IP
negotiating objectives, while it does not see these provisions as being
specifically addressed by the Doha Declaration. Therefore, USTR
officials noted that these three provisions are pursued universally by
USTR in all of its FTAs. USTR officials noted that these provisions are
very important for providing protection similar to that found in U.S.
law and for maintaining incentives for the pharmaceutical industry.
USTR officials explained that USTR does not believe that these three
provisions are considered flexibilities under the Doha Declaration, and
therefore sees no conflict between pursuing them and respecting the
Doha Declaration. USTR officials noted that USTR maintains that these
provisions do not restrict a country's ability to protect public
health.
The pattern of IP provisions negotiated in the 11 FTAs completed to
date confirms USTR's stated negotiating strategy. Figure 2 demonstrates
that data exclusivity, patent term extension, and patent linkage
provisions are found in all 11 of the FTAs concluded under TPA,
regardless of the development level in the country. Pursuing these
provisions also confirms USTR's stated strategy of seeking high IP
standards related to pharmaceuticals in trade negotiations. On the
other hand, figure 2 indicates that IP provisions on compulsory
licensing are found in only 2 of 11 completed FTAs, those with
Singapore and Australia, both of which USTR considered developed
countries. Only 3 of 11 FTAs--Singapore, Australia, and Morocco--
contain provisions on parallel imports. Although Morocco is considered
a developing country, USTR officials explained that Morocco decided in
2000, well before the onset of negotiations, not to permit parallel
imports. Therefore, USTR officials stated that the parallel importation
provision reflected what was already provided in Moroccan law.
The Pharmaceutical Industry Supports USTR's Insistence on Data
Exclusivity, Patent Linkage, and Patent Term Extensions, but Others
Contend These Provisions Contradict the Principles of the Declaration:
Reactions to USTR's approach to pursuing its TPA objectives in
negotiating FTAs have been mixed, with controversy centered on the
three key provisions of data exclusivity, patent linkage, and patent
term extensions. The pharmaceutical industry stated that it supports
the inclusion of these provisions in FTAs because it believes they
maintain incentives for research and development. However, some experts
and public health advocates have raised concerns that USTR's approach
delays generic competition and reduces access to medicines. Therefore,
they believe that USTR's strategy violates the principles and goal of
the Doha Declaration.
The Pharmaceutical Industry Considers Data Exclusivity, Patent Linkage,
and Patent Term Extensions Key Provisions:
Pharmaceutical industry representatives stated that data exclusivity is
a very important IP protection that provides incentives to innovate and
invest in certain markets. Data exclusivity grants a company the
exclusive use of its safety and efficacy test data, necessary to obtain
marketing approval, for a fixed period after the marketing launch. Data
exclusivity is one method by which the innovator company can recoup the
costs involved with conducting clinical tests necessary for marketing
approval, as well as the considerable costs associated with developing
a new drug. Industry representatives explained that they consider
patent protection and data exclusivity to be separate but complementary
protections. Both can generally provide a period of exclusivity.
Consequently, data exclusivity may effectively grant another layer of
market exclusivity for the new product. Figure 3 contains three
scenarios of how the periods of data exclusivity and patent protection
can interact to create market exclusivity under U.S. law.
Figure 3: Data Exclusivity and Patent Protection, Three Possible
Scenarios:
This figure is a chart detailing data exclusivity and patent protection
for three different scenarios.
[See PDF for image]
Source: GAO analysis.
[End of figure]
Some time after the initial drug development takes place, the company
applies for a patent and the 20-year patent term begins. During the
patent term, the company completes all of the drug trials necessary to
obtain the safety and efficacy data needed for marketing approval by
the FDA. After approval is granted, the company can begin marketing its
drug, and the set period of data exclusivity period begins. Industry
representatives noted that the data exclusivity period generally is
concurrent with the patent period and therefore does not add any
additional period of effective market exclusivity, as shown in the
first scenario in figure 3. However, as shown in the second scenario,
if marketing approval is obtained further into the patent term, the 5-
year data exclusivity period, which begins when marketing approval is
granted, can extend beyond the term of the patent. As shown in the
third scenario, when no patent protection exists, data exclusivity
effectively provides the entire market exclusivity period.
Pharmaceutical industry representatives stated that the first scenario
is the most typical, with the data exclusivity running concurrently
with patent protection. However, they noted that there are many
instances in which companies do not obtain patents on their products
(particularly for small markets), or patent protection is inadequate or
poorly enforced. In these situations, data exclusivity ensures the
innovator company a 5-year period of market exclusivity. The
pharmaceutical industry believes that, in cases in which there is no
patent or very little patent life remains when the drug first enters
the market, data exclusivity is critical because without an effective
market exclusivity period, incentives to research and develop new drugs
are diminished.
Pharmaceutical industry representatives have also advocated for patent
term extensions in FTAs. It is common for a substantial portion of the
patent life to be spent running drug trials. Therefore, the industry
argues that patent term extensions ensure that innovators get enough
time to recoup their costs and maintain the incentives for future
innovation. In addition, industry representatives noted that, in many
developing countries, the delays associated with getting a patent or
obtaining marketing approval for a new drug can be far more extensive
than in the United States. They argue that, under these circumstances,
it is even more critical that a safeguard mechanism exists to ensure
that these delays do not undermine the intentions of patent protection.
Patent linkage is also considered important by the pharmaceutical
industry. Patent linkage provisions in the FTAs provide for delay of
marketing approval if a generic drug product is covered by an unexpired
patent. Pharmaceutical companies claim that generic companies routinely
launch patent-infringing products during the life of a patent in many
developing countries and that patent linkage would help to minimize
this problem.
Some Experts and NGOs Believe USTR's Continued Promotion of Data
Exclusivity, Patent Term Extensions, and Patent Linkage Conflicts with
the Principles of the Doha Declaration:
Some experts and NGOs believe that these provisions impair access to
medicines and therefore are contrary to the "spirit" of the Doha
Declaration and TPA guidance. These NGOs, academics, and generic
pharmaceutical producers believe that these provisions limit generic
competition, thereby maintaining high prices for pharmaceutical
products, ultimately impairing access to medicines. These concerns have
been extensively discussed and documented by academics, international
organizations, think tanks, NGOs, and public health groups. Since many
FTA partners implemented these pharmaceutical-related IP provisions for
the first time very recently, it is difficult to identify the tangible
effect of these provisions. However, these groups believe that the
inclusion of these provisions has the potential to decrease public
health and therefore is contrary to the spirit and principles and goal
of the Doha Declaration.
Many NGOs argue that the data exclusivity provisions included in U.S.
FTAs will damage access to medicines and public health and worry that
there might be instances where the data exclusivity period could extend
beyond the length of the patent term, as in figure 3, scenario 2. This
data exclusivity period effectively delays entry of generics onto the
market, thereby maintaining monopoly prices for a longer period of
time. While some NGOs recognize that it would be rare for the data
exclusivity period to extend beyond the patent term, they are worried
that if this situation occurs, generic competition will be delayed
because of the presence of data exclusivity. In addition, where the
innovator of a new drug did not obtain a patent in that country, either
because it did not apply or because the new drug was not patentable,
data exclusivity will effectively give the innovator a patent-like
period of marketing exclusivity for the entire period of data
exclusivity, from the time marketing approval is granted (see figure 3,
scenario 3). NGOs are also concerned that data exclusivity provisions
might prevent the marketing of generic drugs produced under a
compulsory license. For instance, if a compulsory license is granted to
a generic producer, but that producer is not able to rely on the data
generated by the innovator company to obtain needed marketing approval,
it will not be possible to distribute the drugs under a compulsory
license.
Some experts and NGOs are also concerned that variations in the data
exclusivity periods across countries could further delay generic entry.
An FTA partner country must normally provide 5 years of data
exclusivity to the innovator once the product receives marketing
approval.[Footnote 29] If the innovator waited to apply for marketing
approval in the FTA partner country, thereby delaying the start date of
its market exclusivity period, it would effectively extend the overall
market exclusivity period beyond the intended 5 years. Some FTAs have
addressed this issue by specifying that a country may require the
innovator to apply for marketing approval in its country within a
specified period of time. For instance, in the CAFTA-DR agreement, at
their request, a Party may require that the innovator seek marketing
approval in that Party within 5 years after obtaining marketing
approval in any other territory in order to receive data exclusivity.
This way, the innovator company can only delay the start date of its
data exclusivity period by a fixed period of time.
Patent term extension provisions in FTAs have also led to questions
about their effect on access to medicines. Many NGOs and generic
pharmaceutical producers believe that the 20-year patent term in TRIPS
creates a balance between access and innovation and that extending the
patent period would have a detrimental effect on generic competition.
They are also concerned that the patent term extension provisions in
U.S. FTAs do not contain the same limits present in U.S. law. For
instance, under U.S. law, innovators cannot receive more than 14 years
of patent protection through a patent term extension after they have
received market approval, and in any case, the maximum period of
extension determined on the basis of the regulatory review period
cannot exceed 5 years. This limit on patent term extensions is not
present in FTAs.
Some also assert that patent linkage might negatively affect access to
medicines. The patent linkage process in the United States involves
numerous steps and actors, designed to enable resolution of patent
disputes before marketing approval is granted for a generic drug
product. As shown in figure 4, this linkage system places the burden on
the private companies, not the regulatory authority, to monitor the
patent system.
Figure 4: Patent Linkage Process in the United States:
This figure is a chart showing the patent linkage process in the United
States.
[See PDF for image]
Source: GAO analysis.
[End of figure]
Specifically, the U.S. patent linkage system puts the onus on the
generic company producer to provide information on the applicability of
an existing patent to the drug product for which it is seeking
marketing approval. If the generic company decides to challenge the
patent, it must notify the patent holder within a specified period of
time in order to give the patent holder the chance to sue and defend
the patent in the courts. When the patent litigation is resolved, the
FDA can grant marketing approval to the generic company if the patent
is overturned, and may be obliged to wait until the patent expires if
the generic drug product is found to infringe the patent and the patent
is not found to be invalid. NGOs and generic pharmaceutical producers
are concerned that developing countries do not have the same set of
protocols laid out in the FTA agreement or in their laws, and that this
will ultimately affect access to medicines. Generic pharmaceutical
representatives argue that countries might experience regular abuses
and delays in the introduction of generic drugs if they are unable to
institute an effective linkage process.
Congressional Concern over IP Provisions and Access to Medicines
Addressed in Bipartisan Trade Deal:
Certain Members of Congress have expressed concern over the
pharmaceutical-related IP provisions in FTAs with developing countries,
and this concern was recently addressed through a bipartisan compromise
between Congress and the administration. Through letters and
correspondence with USTR, certain Members emphasized the need to better
balance IP protection for pharmaceuticals with the promotion of access
to affordable medicines, including through robust generic competition.
These Members expressed unease over the balance achieved in the FTAs
negotiated by USTR to date--specifically, the impact of the
pharmaceutical-related IP provisions in FTAs on developing countries.
These Members urged USTR to ensure that the FTA provisions do not
restrict the availability of generic competition and put affordable
health care at risk. In response to these concerns, in May 2007,
Members of the congressional leadership agreed on a bipartisan
compromise with the administration to revise four of the recently
negotiated FTAs, in order to alter provisions pertaining to a variety
of areas, including IP provisions and access to medicines.
The bipartisan trade deal reached between Congress and the
administration in May 2007 stipulated that certain disputed IP
provisions in FTAs with Peru, Colombia, Panama, and Korea be revised
prior to submission of the agreements for congressional approval, by
USTR and the trading partners.[Footnote 30] According to USTR
officials, the agreement preserves a strong overall level of IP
protection in the FTAs, while incorporating flexibilities aimed at
ensuring that trading partners are able to achieve the appropriate
balance between innovation and promoting access to medicines.
Specifically, USTR revised the FTAs with Peru, Colombia, Panama, and
Korea to include a reference to the Doha Declaration and the ability of
each country to protect public health in the body of the agreement,
instead of in a side letter. In addition, the data exclusivity
provision in each of these agreements was revised to provide an
exception for public health.
The agreements with Peru, Colombia, and Panama were revised further to
alter the language of provisions on patent term extensions, patent
linkage, and data exclusivity. A USTR official stated that USTR and
Congress decided that these additional changes would not be applied to
the Korea FTA in view of Korea's relatively higher level of economic
development. These additional changes to the Peru, Colombia, and Panama
agreements revised the provisions on patent term extensions and patent
linkage in order to provide more flexibility for trading partners in
implementing these provisions. In addition, the data exclusivity
provision was revised further to ensure that, in some circumstances,
the data exclusivity period in those countries would not extend beyond
the period of data exclusivity provided in the United States. These
changes were renegotiated and finalized by USTR in June 2007.
USTR Is Implementing and Overseeing Trade Agreements in a Manner
Consistent with Its Overall Approach of Promoting High Standards
concerning IP Rights:
USTR's approach to implementing and overseeing pharmaceutical-related
IP provisions is consistent with its overall negotiating strategy
pursued in FTAs. Before a signed FTA can go into force, the President
determines, with USTR's advice, whether the FTA partner has met all
obligations, including, when appropriate, changes in laws and
regulations. As part of this process of advising the President on the
determination that he is required to make under U.S. implementation
legislation for FTAs, USTR has vigorously pursued FTA partners'
implementation of pharmaceutical provisions related to data
exclusivity, patent term extension, and patent linkage. In fact, in
some cases, USTR has continued to work with countries after the
agreement has entered in force. For example, USTR is still working with
Chile to ensure that its data exclusivity provisions are implemented in
a manner consistent with the Chile FTA.
In its broader role of annually identifying countries that deny
adequate and effective protection of IP rights, USTR has frequently
raised data protection and patent linkage, in keeping with its strategy
of gaining high levels of IP protection for pharmaceutical products,
similar to U.S. law. With regard to the Doha Declaration flexibilities,
USTR has not generally pressed for restrictions on compulsory licensing
and parallel imports in its Special 301 reports. Furthermore, USTR has
had a measured response to cases to date of countries actually issuing
compulsory licenses. For example, when Thailand recently issued a
compulsory license, USTR acknowledged its right to do so and thus far
is restricting its criticism to a lack of transparency in the process.
USTR Reviews Compliance with FTA Obligations before Agreements Enter
into Force:
One USTR official noted that USTR oversees FTA partners' implementation
of the pharmaceutical-related IP provisions agreed to in the FTA in
order to ensure that the negotiated standards are implemented as
intended. In order for an agreement to enter into force, the President
determines with the advice of USTR whether the FTA partner has met all
obligations. A USTR official explained that USTR works with the trading
partner to ensure that its IP laws are aligned with the provisions
agreed to in the FTA. The USTR official further explained that, at the
start of the implementation process, the trading partner provides USTR
a comprehensive list of its laws related to each provision in the IP
chapter of the FTA. The trading partner also provides USTR a list
detailing the intended legal changes necessary to bring its laws into
compliance with the agreement. USTR reviews the laws and proposed
changes and provides the trading partner with comments regarding their
degree of compliance. USTR monitors the changes in the other country,
and has numerous exchanges with the trading partner on any legal
changes necessary. One USTR official stated that they are careful to
ensure that the agreement is implemented exactly as it was negotiated.
For example, in response to Guatemala's proposal to have an exception
to data exclusivity written into its laws, USTR insisted that this
exception undercut the original obligations, and it was therefore
unwilling to accept the change.
A USTR official explained that when the legal changes are complete and
USTR is comfortable with the new legislation, USTR makes a
recommendation to the President for the agreement to enter into force.
The administration then makes a determination about the legal
compliance before the agreement can officially enter into force. USTR
and other agencies also provide technical assistance on implementing
related IP provisions to FTA partner and nonpartner governments. (See
appendix II.)
USTR Vigorously Pursues Implementation of Data Exclusivity, Patent Term
Extension, and Patent Linkage:
USTR focuses on a wide range of IP provisions including data
exclusivity, patent term extensions, and patent linkage during the FTA
implementation phase to ensure that U.S. trading partners are properly
implementing and enforcing pharmaceutical-related IP provisions. In
2005, Chile reformed its data protection regime; however, a USTR
official stated that USTR has continued to monitor Chile's
implementation of data exclusivity in response to concerns raised by
the pharmaceutical industry. Specifically, USTR officials noted that
Chile had added a requirement that, in order to receive data
exclusivity, companies must apply for marketing approval within a year
of doing so in other countries. USTR is also monitoring Chile on
specific issues with regard to the implementation of patent linkage and
patent term extensions. In particular, USTR is responding to concerns
that the Chilean health authorities issued a number of marketing
approvals of generic versions of drugs still under patent. Chile
appears to have no provision that would prevent such an approval from
being issued during the patent term. In addition, USTR noted that Chile
has yet to implement a law that would enact patent term extensions to
compensate for delays in marketing approval.
USTR Has Focused Attention on Data Protection and Patent Linkage in Its
Special 301 Report:
USTR officials noted that USTR regards the Special 301 report, which is
subject to different statutory requirements distinct from TPA,[Footnote
31] as an important tool for overseeing and evaluating the
implementation and adequacy of IP protection worldwide. USTR officials
explained that USTR considers all items that are related to the
effectiveness and adequacy of IP protection in its Special 301 report.
They noted that in the Special 301 report there are considerations
relevant to adequacy and effectiveness that sometimes go beyond the
minimum standards laid out in TRIPS. In fact, there are many examples
of situations discussed in the Special 301 reports that are not
specifically part of TRIPS. Thus, the Special 301 report tracks
progress of WTO member implementation of TRIPS and trading partner
implementation of FTAs, as well as how adequately countries are
protecting IP rights overall. While the Special 301 report focuses on a
wide range of IP protection issues related to copyrights, patents, and
trademarks, including piracy, counterfeiting, and enforcement, our
analysis focuses only on the pharmaceutical-related issues discussed in
this report. Thus, this analysis focuses only on the countries listed
on the Special 301 report for which pharmaceutical-related issues were
mentioned as a concern, which represent only a subset of the issues
discussed and the total number of countries listed in the Special 301
reports over the years 2000-2007. (See table 1.)
Table 1: Countries Listed in the Special 301 Report with Mention of
Pharmaceutical-related Issues Compared to All Countries Listed (2000-
2007):
Total countries listed with mention of pharmaceutical-related issues;
2000: 17;
2001: 21;
2002: 21;
2003: 23;
2004: 37;
2005: 32;
2006: 31;
2007: 27.
Total countries listed for all issues;
2000: 56;
2001: 50;
2002: 51;
2003: 50;
2004: 51;
2005: 52;
2006: 48;
2007: 43.
Source: GAO analysis of Special 301 Reports.
[End of table]
Consistent with its emphasis in FTAs, our analysis of the Special 301
reports indicates that USTR focuses heavily on data protection in its
annual Special 301 reports. For countries listed in the Special 301
reports over the period 2000 through 2007 for whom pharmaceuticals was
cited as an issue of concern, data protection was mentioned in almost
every case. In fact, data protection is the most frequently mentioned
of all pharmaceutical issues in the Special 301 reports over that 8-
year period, appearing a total of 173 times. (See figure 5.)
Figure 5: Number of Pharmaceutical Provision Mentions in Special 301
Reports (2000-2007):
This is a bar chart showing the number of pharmaceutical provision
mentions in Special 301 reports. The X axis is the number, 0 to 70, and
the Y axis represents the year, 2001 to 2007.
[See PDF for image]
Source: GAO analysis of Special 301 reports.
[End of figure]
USTR's focus on patent linkage is also similar to its negotiating
strategy in FTAs. The second most frequently mentioned pharmaceutical
provision in Special 301 reports from 2000 through 2007 is patent
linkage, which is mentioned 56 times. Pharmaceutical counterfeiting is
also discussed somewhat regularly in the Special 301 reports over this
period, but not as frequently as data protection or patent linkage.
USTR Has Only Infrequently Mentioned Compulsory Licensing or Parallel
Imports in Special 301 Reports:
There is limited mention of compulsory licensing or parallel imports in
the Special 301 reports. In the Special 301 reports from 2000 through
2007, compulsory licensing regarding pharmaceuticals is only mentioned
nine times, while parallel importing related to pharmaceuticals is
mentioned only three times. While the IP objectives in TPA do not
control the coverage of the Special 301 reports, USTR's approach to
these two provisions referenced in the Doha Declaration seems similar.
USTR officials explained that USTR recognizes that the TRIPS agreement
allows countries some flexibility regarding the use of compulsory
licenses and parallel imports when protecting public health. By not
mentioning these provisions frequently in the Special 301 report, USTR
acknowledges the existence of these flexibilities, as highlighted in
the Doha Declaration. However, USTR officials also noted that the
infrequency with which these provisions are mentioned is due to the
fact that the trading partners rarely make use of these flexibilities.
USTR Has Acknowledged Thailand's Right to Issue a Compulsory License,
but Criticized Its Lack of Transparency:
Thailand recently issued a compulsory license on a pharmaceutical
product, citing a public health need. In November 2006, Thailand issued
a compulsory license on a drug for treating HIV/AIDS, followed by two
more compulsory licenses issued in early 2007 for another HIV/AIDS drug
and a heart disease medication. These compulsory licenses are
government-use licenses issued under Thai law. The government of
Thailand announced that these decisions were aimed at improving access
to essential medicines and public health in Thailand. In addition,
Brazil issued a compulsory license for one of the same HIV/AIDS drugs
in May 2007.
Public reaction to Thailand's and Brazil's actions has been mixed, with
some defending their right to issue a compulsory license and others
criticizing their actions as irresponsible. For instance, the
pharmaceutical industry believes that the compulsory licenses were
unnecessary and will ultimately negatively affect drug innovation, and
is concerned the licenses will set a precedent for similar actions.
However, many NGOs stated that they support countries like Thailand and
Brazil using their right to issue compulsory licenses in order to
improve access to medicines in their countries.
USTR's response to Thailand's and Brazil's issuance of compulsory
licenses has been more measured. USTR officials told us that in all
speeches, letters, and private conversations, USTR tried to recognize
and convey that Thailand has the ability to issue compulsory licenses.
However, they noted that, when issuing a compulsory license, it is
important that the issuer engage with all of the affected stakeholders,
including patient groups and patent holders, about the best way to meet
public health needs. In both the Brazil and Thailand cases, USTR has
tried to focus on the procedures and processes followed by the
governments, rather than on the validity of the licenses. USTR
officials noted that, in general, they are reluctant to insert
themselves into price negotiations between governments and the
pharmaceutical industry, but that they will advocate for transparency.
Although USTR mentioned both the Thai and possible Brazil cases of
compulsory licensing in the 2007 Special 301 report, the report limited
its criticism to issues of good governance. USTR officials noted that,
at the time the report was issued, all three compulsory licenses had
already been issued by Thailand, and that they believed the Brazilian
compulsory license was imminent. For example, in the Thai case, USTR
was careful in its report to recognize a country's ability to issue
compulsory licenses subject to WTO rules and the country's domestic
laws. However, it expressed concern about what it considered to be the
lack of transparency exhibited in Thailand, and emphasized the need for
such transparency in discussions with all relevant stakeholders in
Brazil.
USTR officials stated that the decision to elevate Thailand from the
watch list in its 2006 Special 301 report to the priority watch list in
2007 was based on broad IP concerns, not solely on its compulsory
license decision. They explained that there were many major IP concerns
in Thailand and many complaints that fueled their decision. In
addition, they noted that, while Thailand was raised to the priority
watch list, Brazil, which was also about to issue a compulsory license
at the time, was lowered from the priority watch list to the watch
list. They said that Brazil's standing improved due to impressive work
in other areas of IP enforcement, and that the imminent compulsory
license did not alter USTR's decision to improve Brazil's standing.
Nevertheless, in its 2007 Special 301 report, USTR noted that it will
conduct an out-of-cycle review to evaluate Brazil's progress in other
areas and encourage additional progress in areas of outstanding
concern.
Public Health Input on IP Rights Has Been Limited in U.S. Trade
Negotiations:
Since TPA, public health input into U.S. trade negotiations has been
limited. In negotiating trade agreements under TPA, the President must
seek advice and information from executive departments and the public
and private sectors.[Footnote 32] Although U.S. agencies generally
support USTR's negotiations approach, interagency input on U.S. trade
negotiations has not addressed the public health implications of IP
pharmaceutical provisions negotiated under TPA and has been primarily
technical in nature. For instance, HHS, the lead U.S. agency on global
public health and social welfare issues, endorses USTR's negotiating
approach that strong IP protection promotes public health and access to
medicines. However, HHS advice during trade negotiations has generally
concentrated on technical advice from one of its subagencies, the Food
and Drug Administration (FDA), to ensure that FTA provisions related to
pharmaceuticals do not violate U.S. law and are consistent with U.S.
health regulations. HHS has not addressed policy questions related to
whether FTA provisions might affect public health in FTA partner
countries. Within the formal private sector advisory system, two public
health representatives were recently added to two private sector
Industry Trade Advisory Committees (ITACs) after USTR had concluded
nine trade agreements. These two committees are respectively composed
of 20 and 33 private sector representatives from the pharmaceutical and
other industry sectors. USTR has obtained some public health
perspectives from stakeholders through other formal and informal means,
including public hearings, Federal Register comments, and written
correspondence.
The Departments of Health and Human Services and State Endorse the View
that IP Protection Supports Access to Medicine:
HHS officials told us they support the USTR position concerning the
Doha Declaration and agree with USTR's view that strong IP protection
promotes innovation and access to medicines. The agency supports the
administration's vision for both global health and overall U.S. foreign
policy, and HHS's Office of Global Health Affairs (OGHA) is the U.S.
focal point for policy coordination across multilateral health and
science organizations. According to OGHA officials, the FDA's generic
drug preapproval process is a key example of HHS efforts to balance
high IP standards and access to medicines. Officials stated that the
FDA generic drug preapproval process exhibits HHS support for creating
a market for high quality generics that meet international standards.
The agency has also supported USTR's interpretation of TRIPS
flexibilities in multilateral discussions about IP and public health,
such as those held at WHO. According to officials, HHS's OGHA
coordinates U.S. policy inputs and interests as they pertain to IP
rights and public health in WHO, ensures that the U.S. policy position
at WHO meetings reflects administration priorities, and works with USTR
and other U.S. agencies to advance U.S. IP and public health interests
internationally. Most recently, HHS hosted the newly formed WHO
Commission on Intellectual Property Rights, Innovation, and Public
Health, and has been the lead federal agency in coordinating the U.S.
response across agencies, including USTR, to a 2006 WHO report on IP
rights and public health.
State Department officials also support the USTR's view that IP
protection is important for promoting access to medicines. However,
State Department officials said they principally demonstrate the U.S.
strategy to balance IP rights and public health through various
programs and initiatives. For example, State's Office of the Global
AIDS Coordinator (OGAC) works with several other agencies, including
HHS, to implement the President's Emergency Plan for AIDS Relief
(PEPFAR), which has programs in over 120 countries and a special focus
on 15 countries that are primarily located in sub-Saharan Africa. OGAC
and USAID also worked with the FDA to develop the generic drug
preapproval process to support the purchase of low priced, high quality
drugs for the PEPFAR program. This effort resulted in the preapproval
of over 50 generic antiretrovirals (ARV) to date and almost $2 million
in savings on generic drug purchases in 2006. In addition, USAID
developed a centrally managed contract, the Partnership for Supply
Chain Management, in order to work with generic companies to address
drug supply chain challenges and increase research and development for
a steady supply of ARVs in developing countries.
Interagency IP Rights and Public Health Perspective Is Limited to
Technical Advice:
USTR has obtained some input on IP rights and public health in trade
negotiations through the formal interagency trade policy process, but
public health perspectives on USTR's negotiating approach to
pharmaceutical issues in FTA negotiations are primarily technical in
nature and have not included an examination of the public health
impacts of FTA provisions.[Footnote 33] USTR coordinated with HHS when
it first began to formulate its basic policy goals for negotiating
FTAs, and HHS has had the opportunity to review draft FTA texts through
the interagency advisory system. However, HHS has had limited
involvement in the actual trade negotiations.[Footnote 34] According to
USTR, most public health issues are worked out in advance of the
negotiations. HHS and USTR occasionally convene an interagency working
group to discuss IP rights and public health issues that arise at WHO
or in other multilateral fora.
Although USTR routinely briefs HHS after each round of FTA
negotiations, OGHA officials stated that the health agency's role in
trade, IP rights, and the negotiation of pharmaceutical-related IP
provisions in FTAs has primarily involved providing technical expertise
through its subagencies when requested by USTR. For example, FDA
officials stated that their overall mission is generally not related to
trade, but instead focuses on regulatory matters as they affect public
health. The agency offers technical advice to USTR during negotiations
to ensure that FTA provisions related to pharmaceuticals do not violate
U.S. law and are consistent with U.S. health regulations. For instance,
the FDA has provided a perspective on regulatory issues in FTAs to
ensure that provisions do not have implications for U.S. regulatory
programs. HHS officials also stated that they have no role in assisting
countries in pursuing objectives of the Doha Declaration. Although they
have good working relationships with the health ministries of many
countries, conversations generally focus on technical advice with
regard to regulatory issues. For example, subagencies such as the FDA
may provide regulatory advice and guidance to FTA partners, during
negotiations or FTA implementation, on the regulatory responsibilities
associated with various IP provisions, the manner in which provisions
function in the United States, and how U.S. regulatory systems operate.
OGHA officials told us they are satisfied with HHS's role and input in
the interagency advisory process and the public health considerations
provided in U.S. trade negotiations and policy, and the office does not
believe IP provisions in FTAs restrict access to medicines. However,
there is little evidence that USTR consulted with HHS or OGHA regarding
FTA partner countries' concerns about the potential impact on public
health of specific pharmaceutical provisions in FTAs since the Doha
Declaration and the Trade Promotion Authority Act of 2002 were agreed
upon, although the HHS OGHA's mission includes promoting the health of
the world's population. OGHA officials noted that USTR has never
approached them to discuss such country concerns about public health.
According to USTR officials, USTR does not generally talk to HHS about
countries' concerns about the public health impact of FTA provisions,
but instead relies on the countries themselves to raise concerns, since
developing countries know their own public health systems and needs
better than any U.S. agency would. Similarly, HHS has not been asked by
USTR to conduct analyses of the impacts of FTA provisions on regulatory
institutions in partner countries, and HHS has not provided such an
assessment. There is also little evidence that the agencies have
determined whether the FTAs affect public health, either positively or
negatively, and HHS officials stated they do not have the technical
capacity to do so.
Similarly, the PTO Office of International Affairs is involved in the
FTA negotiations process as a technical advisor under its statutory
authority regarding IP issues. The office advises USTR on WTO issues
and FTAs, meets with USTR to discuss strategy before each round of FTA
negotiations, and participates in the negotiations. For example, USTR
may ask PTO's opinion about the use of a particular technical term. PTO
also provides technical advice and training to FTA partner countries on
pharmaceutical IP provisions during FTA negotiations, and provides
clarification on the interpretation of negotiated provisions. For
instance, in the CAFTA-DR negotiations, partner countries asked PTO to
explain data exclusivity in further detail and how the provision
functions in the United States. According to officials, PTO never
states that the U.S. method of implementing a particular provision is
the only way to implement or fulfill a particular FTA obligation, but
instead simply provides U.S. examples.
The State Department is also involved in interagency coordination on
trade and public health through the interagency advisory system as well
as during FTA negotiations, but agency officials stated that trade and
IP efforts are only one small part of the larger U.S. government effort
to increase access to medicines. USTR consults with State through the
formal interagency advisory review process, and State officials are
included in all discussions of IP chapters in the FTAs. However, the
agency primarily makes an effort to balance IP rights and access to
medicines through public health initiatives it coordinates with other
agencies or administers itself, such as PEPFAR. USAID has extensive
global health programs and had some involvement in policy discussions
at the time of the Doha Declaration. The development agency has had
little or no involvement in such discussions since, however.
Public Health Representatives Were Recently Added to the Industry Trade
Advisory Committees:
In January 2007, public health representatives were added to the two
technical ITACs most relevant to pharmaceuticals and IP rights-
-the chemicals committee (ITAC-3) and the IP committee (ITAC-15)--where
multiple brand-name pharmaceutical companies serve. However, by the
time that USTR and the Department of Commerce had appointed one public
health representative to each of these two committees, USTR had
concluded nine FTAs.
According to Commerce officials, the appointments were prompted by an
April 2005 request by an NGO for public health perspectives in several
of the industry trade advisory committees. Within 3 months, Commerce
and USTR agreed to consider adding public health representatives to the
industry advisory system, but the appointments were delayed until
2007.[Footnote 35] Although USTR and Commerce indicated at least one
public health representative would be appointed to both the IP
committee and the chemicals committee in December 2005, a coalition of
NGOs filed a lawsuit against USTR during the same month for public
health representation on six other ITACs in the trade advisory
committee system as initially requested in 2005.[Footnote 36] The
lawsuit is pending an appeal, after an initial ruling dismissing the
case on the grounds that the court could not find any meaningful
standards in the Trade Act of 1974 under which it could judge the
balance of the membership of the trade advisory committees.[Footnote
37] Due to the ongoing litigation relating to the composition of the
trade advisory system, we do not make any judgments about the
appropriateness of a particular committee's composition.
USTR maintains that representatives in other trade advisory committees
provided public health input on FTAs. For instance, USTR noted that
Trade and Environment Policy Advisory Committee (TEPAC) members had
access to the secure private sector advisory Website, and that some
groups in that committee had expressed concern about provisions in
several FTAs. Specifically, some environmental and consumer group NGOs
on the committee have submitted concerns to USTR in committee reports
on the FTAs about the impacts certain FTA provisions have on public
health and access to medicines. In an alternative opinion attached to
several committee reports, the minority group of TEPAC representatives
maintained that U.S. FTAs are inconsistent with the Doha Declaration on
TRIPS and Public Health and that FTA provisions on data exclusivity and
patent linkage, as well as limitations on the use of compulsory
licensing, reduce access to medicines. They recommended that Congress
not approve some FTAs and requested Congress to take their public
health concerns into account when considering other FTAs.
There is little evidence that USTR discussed the concerns submitted
about the public health impact of FTAs with U.S. health agencies or
other members of the public health community. A member of the TEPAC
committee also noted that although the environmental advisory committee
reports provided to USTR include the committee members' recommendations
or concerns about public health in FTAs, there is little dialogue
between USTR and committee members on these issues. In the member's
opinion, this is because the advisory consultations are not integrated
into the FTA negotiations process, which limits the ability of members
to advise USTR on the issues that arise during negotiations, including
public health concerns, as opposed to after a draft has been developed.
However, USTR notes that the concerns have been raised and discussed by
the USTR personally during TEPAC meetings.
The Committees on Which Public Health Representatives Participate Are
Composed of a Majority of Other Private Sector Industry Stakeholders:
The two individuals that were appointed as public health
representatives on the ITACs individually serve on committees that are
respectively composed of a total of 20 and 33 private sector
representatives from the pharmaceutical and other industry sectors.
(See figure 6.) Commerce officials explained that, in selecting among
the 10 applicants who responded to the Federal Register notice, they
considered candidates' backgrounds to determine if the candidates
understood both relevant IP issues and which public health concerns
would be relevant to the intersection of public health, international
trade, and IP rights or pharmaceuticals, respectively, as relevant to
the work of the committees. According to these officials, the selection
committee also tried to ensure that the representatives would make
meaningful contributions to the committees and have the weight
necessary to challenge the committees when necessary. Commerce
officials did not believe it was necessary to have two public health
representatives on one committee representing the same view, and they
said that they did not find any other viable candidates with additional
perspectives beyond the individuals selected. However, Commerce
officials stated that the Federal Register notice announcing the
positions on the ITACs remains open. If additional qualified public
health candidates applied would contribute another perspective to
either of these two committees applied, they said the agency would
consider adding additional public health representation.
Figure 6: Public Health Representation on Industry Trade Advisory
Committees:
This figure is a chart is combination of pie charts showing the public
health representation on industry trade advisory committee.
[See PDF for image]
Source: GAO analysis of USTR documents.
[End of figure]
USTR Has Received Public Health Input through Other Formal and Informal
Means:
Our review showed that, although USTR has received limited input on
public health through formal advisory system communications channels,
it has received public health input through other formal and informal
processes, including input from the pharmaceutical industry and the
public health community. Pharmaceutical Research and Manufacturers of
America (PhRMA), the pharmaceutical industry trade group, has submitted
annual reports to USTR on industry concerns about IP rights globally
for the agency to consider in developing its Special 301 report. Both
pharmaceutical industry representatives and public health community
members have also provided input on IP rights and public health
concerns for several FTAs that have been concluded through USTR's
formal public hearings and the Federal Register comments. In addition,
USTR has received and responded to congressional correspondence
regarding members' public health concerns about the impact of FTAs.
According to USTR officials, while there are some minor modifications
to FTA texts during each negotiation, the public health community is
aware of the provisions the United States proposes to be included in
each agreement, given past FTAs implemented, and may also provide
public health input through more informal mechanisms. For example, USTR
has received and responded to some informal input on public health in
trade negotiations through correspondence with NGOs. Moreover, USTR
officials noted that they have an open door policy and will meet with
anyone who requests a meeting, including NGOs, public health
representatives, and generic industry representatives. Both USTR and
private sector representatives, including NGOs, have confirmed that
private sector representatives have provided informal input to USTR on
public health concerns, in particular FTAs, through phone calls or
requested meetings. However, input USTR receives through such channels
may lack the weight of formal private sector input on public health
issues in trade agreements, such as trade advisory committee reports on
proposed trade agreements that are transmitted to the administration
and Congress.
Conclusions:
USTR has followed a consistent approach in negotiating, implementing,
and monitoring its trade agreements under TPA--namely, by protecting
the minimum standards of IP rights provided in TRIPS and promoting high
IP standards similar to U.S. law. Other than making concessions on
compulsory licensing and parallel importation provisions, and on side
letters that state that the IP chapter does not affect a country's
ability to take necessary public health measures, USTR has not changed
its uniformly high demands with regard to IP protection in its FTAs.
The degree to which USTR's policy has achieved the right balance of IP
protection and attention to public health, and more specifically
whether it has respected the Doha Declaration as called for under TPA,
depends in part on the stakeholder asking the question. This reflects a
fundamental tension between protecting IP rights in order to allow
companies to recoup investment and encourage innovation for the long
term, and allowing competitors to sell lower cost drugs for short term
public health needs. As Congress contemplates renewal of TPA, there are
ongoing questions about the overall balance of IP rights and public
health.
Matter for Congressional Consideration:
If Congress disagrees with USTR's interpretation and implementation of
TPA guidance with regard to IP rights and public health, it should
specify more clearly its intentions for U.S. trade policy and public
health policy input related to balancing public health concerns and the
negotiation of IP rights in trade agreements.
Agency Comments and Our Evaluation:
We provided the U.S. Trade Representative; the Secretaries of the
Departments of Commerce, Health and Human Services, and State; the
Administrator of the U.S. Agency for International Development; and the
Under Secretary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office with a draft of this
report. The U.S. Trade Representative; the Secretaries of the
Departments of Commerce, Health and Human Services, and State; and the
Administrator of the U.S. Agency for International Development chose to
provide technical comments. We modified the report where appropriate.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days from the date of this letter. At that time, we will send copies of
this report to the U.S. Trade Representative; the Secretaries of the
Departments of Commerce, Health and Human Services, and State; the
Administrator of the U.S. Agency for International Development; and the
Under Secretary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office. We also will make copies
available to others upon request. In addition, the report will be
available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staff has any questions concerning this report, please
contact me at (202) 512-4128 or at yagerl@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff members who made major
contributions to this report are listed in appendix IV.
Sincerely yours,
Signed by:
Loren Yager:
Director, International Affairs and Trade:
[End of section]
Appendix I: :cope and Methodology:
To evaluate how the U.S. has interpreted the intent and meaning of the
Doha Declaration, we performed document reviews on agency documentation
and correspondence as well as WTO documents, and conducted interviews.
We also reviewed academic studies, pharmaceutical industry reports,
position papers, and media reports. Specifically, we examined relevant
WTO legal documents, including the declaration on TRIPS and Public
Health; the 2003 General Council Chairperson's statement; the August
30, 2003, General Council Decision on the Implementation of Paragraph 6
of the Doha Declaration on TRIPS and Public Health; the December 6,
2005, General Council Decision on the Amendment of TRIPS; and relevant
articles of the TRIPS agreement. We reviewed WTO TRIPS Council minutes
and other official documents, reviewed USTR official documents,
interviewed USTR officials in Washington and Geneva, and interviewed
WTO officials and WTO country representatives in Geneva.
To investigate how the United States negotiates and oversees
implementation of IP provisions related to pharmaceuticals in its trade
agreements, we interviewed USTR officials, reviewed agency documents,
and examined the text of the FTAs negotiated since the Trade Act of
2002. We spoke to USTR officials about their views on the three IP
negotiating objectives in TPA and their overall approach for pursuing
these objectives. Specifically, we learned about the pharmaceutical
provisions pursued by USTR in the IP chapter of its FTAs, and how the
pursuit of these provisions relates to their negotiating approach. We
also reviewed agency documentation of negotiating policy, draft texts
of FTAs, and other types of documentation in order to further examine
the IP negotiating policy pursued by USTR. In order to analyze the
patterns and results of USTR's stated approach, we reviewed the text of
each of the 11 FTAs negotiated under TPA. We evaluated the
pharmaceutical-related IP provisions in each agreement and catalogued
which related provisions were present in the final text of each
agreement. Using this information, we were able to identify patterns
and thereby confirm USTR's stated policy regarding the pursuit of these
provisions. We did not assess the reliability of the per capita income
data contained in figure 2 because we are providing them as background
information only.
In addition, we interviewed officials from Department of State,
Department of Health and Human Services (HHS), Department of Commerce,
the Patent and Trademark Office (PTO), and the U.S. Agency for
International Development (USAID) in order to obtain their perspectives
on the pharmaceutical provisions pursued in the FTAs. We performed
literature reviews of articles and studies documenting the multiple
opinions regarding these provisions pursued by USTR. From this
literature review and from agency meetings, we identified numerous
stakeholders and experts to speak with, including pharmaceutical
industry representatives, public health groups, NGOs, academics, and IP
experts. These groups include Pharmaceutical Research and Manufacturers
of America (PhRMA), Generic Pharmaceutical Association, (GPhA), The
International Federation of Pharmaceutical Manufacturers & Associations
(IFPMA), Oxfam, Doctors without Borders (MSF), Essential Information,
Consumer Project on Technology,[Footnote 38] Health Global Access
Project (GAP), Health Action International, Center for Policy Analysis
on Trade and Health (CPATH), Access to Drugs Initiative (ADI), Third
World Network, Center for International Environmental Law (CIEL),
International Center for Trade and Sustainable Development (ICTSD),
Drugs for Neglected Diseases Initiative (DNDI), as well as three
academics, two intellectual property lawyers, and three public health
experts specializing in this area. We interviewed these stakeholders
and experts in order to gather a complete perspective on USTR's
negotiating strategy and the pharmaceutical-related IP provisions
present in the FTAs. We also traveled to Geneva, Switzerland, to meet
with officials from the U.S. Mission in Geneva; World Trade
Organization (WTO); World Health Organization (WHO); World Intellectual
Property Organization; The Joint United Nations Program on HIV/AIDS;
United Nations Development Program; the Global Fund to Fight AIDS,
Tuberculosis and Malaria, as well as NGOs from the pharmaceutical
sector and public health community.
In order to examine how USTR implements and oversees its trade
agreements, we interviewed USTR officials, reviewed agency
documentation, and analyzed USTR's annual Special 301 reports. We spoke
to USTR officials and reviewed agency documentation about their
approach to implementing and overseeing its trade agreements. In
addition, we examined trends and patterns of citations found in USTR's
annual Special 301 reports in order to analyze how USTR oversees its
trade agreements with respect to IP provisions related to
pharmaceuticals. We reviewed each Special 301 report from 2000 to 2007
in order to identify every mention of a pharmaceutical-related issue
for all countries listed on the priority watch list,[Footnote 39] the
watch list,[Footnote 40] and the Section 306 list[Footnote 41]. For
each country listed in the report in every given year, we noted whether
the report mentioned anything related to a pharmaceutical issue or
concern. We reviewed the reports using decision rules we developed to
identify the most frequently discussed pharmaceutical issues in Special
301 reports over this period. To enhance the accuracy and soundness of
our review, two GAO staff members conducted independent reviews of the
reports. These staff members had a high degree of concurrence in the
pharmaceutical issues they identified and were able to reconcile the
instances where they differed initially. We also interviewed USTR
officials about some of the factors considered during the Special 301
process in order to determine limitations to our analysis. Limitations
to our analysis include the inherent selection bias in the USTR
reports, since the Special 301 report does not capture each IP concern
in every country. Also, there are numerous factors governing a
country's inclusion, but USTR generally focuses on countries with
relatively higher levels of development. The analysis is also limited
to only pharmaceutical-related issues raised in the Special 301 report
over this period and does not capture the weight of each concern. In
addition, pharmaceutical counterfeiting may be undercounted in this
analysis due to the fact that it may be subsumed into more general
references to trademark counterfeiting and inadequate enforcement. We
also obtained and compared the input provided to USTR by U.S. embassies
and the pharmaceutical industry. Additionally, we spoke to USTR
officials about the factors taken into account for the 2007 Special 301
report, specifically regarding the decision of Thailand and Brazil to
issue compulsory licenses on pharmaceutical products.
To investigate how USTR assists other countries in implementing FTAs
and TRIPS obligations, we interviewed agencies involved in providing
technical assistance to FTA partner and nonpartner countries, including
USTR, HHS, PTO, and USAID. We spoke with agency officials about the
type of technical assistance they provide on the FTAs, Doha Declaration
flexibilities, and public health and about the audience receiving the
assistance. We also reviewed technical assistance and training-related
documents and correspondence to corroborate the testimonial evidence.
In order to evaluate the extent of formal and informal IP and public
health input into USTR's trade agreement negotiations, we examined the
formal interagency advisory process, the formal industry advisory
committee process, and several informal means for providing input to
USTR. To examine the level of interagency consultation on trade, IP,
and public health issues between USTR and the Department of State, HHS,
Department of Commerce, PTO, and USAID, we reviewed documentation of
interagency discussions related to the TRIPS Doha Declaration and FTAs.
Limited documentation was available. We also interviewed USTR,
Commerce, HHS, State, PTO, and USAID officials about their roles in the
interagency advisory process and the public health input they provided
or received during WTO discussions on the TRIPS and Public Health
Declaration and during FTA negotiations.
To evaluate the type and extent of public health input USTR received
through the industry trade advisory process, we reviewed industry
advisory committee reports for the IP and chemicals committees, as well
as the trade and environment committee. We also evaluated the
membership of the IP and chemicals industry advisory committees to
determine the composition of industries and interests represented.
However, we did not make any judgments about the appropriateness of any
particular committee's composition. In addition, to better understand
the selection and appointment process for the public health
representatives on the IP and chemicals industry advisory committees,
we interviewed USTR, Commerce, and HHS officials and reviewed
documentation related to the representatives' appointments. We also
spoke with the primary NGO involved in the initial request for public
health representation on the industry advisory committees, as well as
several other NGO and academic members of the public health community,
about their views on the public health representative appointments.
Moreover, we interviewed selected members of the trade and environment
committee, to obtain perspectives on the advisory process and public
health input provided to USTR through it. Furthermore, we reviewed
records of USTR's public hearings on FTAs, Federal Register notice
comments, and congressional and private sector correspondence with USTR
on the FTAs and the issues of IP rights and public health. We also
spoke with several NGOs about public health input they provided to USTR
through meetings and phone calls.
[End of section]
Appendix II: Technical Assistance on IP Rights and Public Health:
Technical assistance on IP rights and public health to FTA partner and
nonpartner governments has been limited and provided mostly upon host
country request. According to USTR officials, U.S. negotiators review
each FTA provision in the text with the signatories, at which time they
may also ask for technical assistance. Also, FTA partner countries
always have the option of requesting trade-capacity building assistance
from the United States at the conclusion of negotiations. However, USTR
has never had a request for TCB on the Doha Declaration, and only on IP
matters related to enforcement. USTR does not initiate technical
assistance on FTA provisions and the use of TRIPS flexibilities, but
responds to country requests, which it forwards to the appropriate
agency. U.S. agencies tend to provide technical advice to FTA partner
governments on regulatory issues, rather than public health issues. For
example, the FDA has provided technical assistance to partner countries
in developing implementing regulatory measures. Similarly, technical
assistance activities conducted by USAID and PTO include conferences,
workshops, capacity-building cooperation agreements, and patent program
certificate programs on topics such as international IP standards in
TRIPS, drafting trade reform legislation, and enforcement of IP rights.
Specific IP issues discussed include data exclusivity, patent
extensions, and implications of FTA IP rights commitments.
According to USAID officials, USAID can provide technical assistance if
the host country has requested assistance in a particular area.
Although FTAs have helped promote training in the area of intellectual
property and public health, the agency has not done much work on those
topics. USAID officials said that most training occurs during FTA
negotiations, but FTA partner countries often receive the training from
WTO or another third party in order to gain a more objective training
or perspective than they believe they would receive from the United
States. Similarly, according to PTO officials, most requested PTO
training is with respect to FTA agreements and primarily focuses on the
implementation and enforcement of FTA provisions, and the audience is
generally patent examiners conducting enforcement activities. The PTO
Global IP Academy, established in 2005, is another example of PTO's
technical assistance on IP matters to other countries, whereby PTO
trains foreign officials on IP enforcement. The agency also advises
countries on drafting implementing legislation and the development of
compliance regulations.
Agencies also provide general technical assistance to countries on
TRIPS obligations. For example, Commerce's Commercial Law Development
Program, which receives some funding from USAID, has provided training
to Pakistan on TRIPS and the role of U.S. agencies in domestic patent
and data protection. However, according to USTR, most requests related
to TRIPS IP issues fall in nonpharmaceutical IP areas, such as
trademark registration, enhancing patent processing, or enforcement
capacity. PTO officials stated that they offered a course on
biotechnology that covered all aspects of patent, copyright, and
trademark WTO provisions. The State Department has also provides a
standard training on IP rights to U.S. Foreign Service Officers through
the Foreign Service Institute (FSI), which includes basic information
on patents, data protection, and other U.S. and TRIPS IP provisions.
The training also provides an overview of the Doha Declaration and
TRIPS flexibilities, including the use of compulsory licenses, as well
as a summary of the U.S. government's objectives for access to
medicines.
While there has been no proactive agency effort to assist countries in
using the Doha Declaration TRIPS flexibilities, agencies have developed
and provided some information upon request. USAID has worked closely
with USTR to develop such U.S.-sponsored training that is TRIPS
compliant and has recently added discussion about the Doha Declaration
and the implementation of compulsory licensing into training on the use
of TRIPS flexibilities. For instance, USAID funded a presentation in
Lebanon on TRIPS implementation in response to requests for assistance
with its WTO accession. In addition, USAID technical assistance
projects were implemented in Egypt related to IP rights and public
health, including a conference on IP and pharmaceuticals that covered
TRIPS, the Doha Declaration, compulsory licensing, and data
exclusivity, under the auspices of the prime minister and minister of
health. Similarly, USAID presented in Uganda a workshop on Developments
at Doha, including TRIPS and public health, as part of assistance
taking place in December 2001 and January - February 2002. USTR stated
that Honduras also conferred with the United States about how to use
the paragraph six waiver to issue a compulsory license, but the drug
was not under patent and training was ultimately not necessary. PTO has
also conducted training on relevant IP provisions, including on U.S.
laws and regulations related to data exclusivity and patent linkage, in
response to country requests. PTO officials emphasized, however, that
it is not PTO's role to ensure that these countries implement the
provisions in the same manner as the United States. In fact, PTO makes
an effort to understand the country's legal context and capacity so
that its advice is appropriate to its circumstances.
In addition, U.S. agencies offer some assistance related to technology
transfer, which is referred to in paragraph seven of the Doha
Declaration on TRIPS and Public Health. For example, HHS provides
significant assistance to developing countries though its technology
transfer activities. The National Institutes of Health (NIH) has
developed innovative programs to improve how technologies are
transferred to developing countries, particularly by identifying those
biomedical research companies and institutions that have the interest
and capacity to receive and develop new biomedical products. According
to HHS officials, NIH has one of the largest biomedical technology
transfer offices in the world. NIH's Office of Technology Transfer
(OTT) has successfully transferred technologies, mostly for infectious
disease diagnosis, treatment and prevention, to institutions in
developing countries such as India, Mexico, Brazil, China, Egypt, and
South Africa and currently is working with institutions in other
developing countries. NIH OTT has also initiated a limited
international technology transfer capacity building program to train
scientists and managers from institutions in developing countries about
intellectual property management and other technology transfer-related
matters. Similarly, USAID is involved in some technology transfer
assistance. According to agency officials, USAID recently established a
technology transfer program in Columbia to assist the local generic
industry.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Loren Yager (202) 512-4128:
Staff Acknowledgments:
Kim Frankena, Assistant Director; Nina Pfeiffer; Diana Blumenfeld;
Suneeti Shah; Yesook Merrill; and Grace Lui made significant
contributions to this report. Martin De Alteriis, Karen Deans, and
Etana Finkler also provided assistance.
[End of section]
Footnotes:
[1] Trade Act of 2002, Pub. L. No. 107-210, § 2102, 116 Stat. 933, 995-
996 (codified at 19 U.S.C. § 3802).
[2] 19 U.S.C. §§ 2152, 2155.
[3] Nevertheless, critics have questioned IP rights' contributions to
innovation. A November 2006 GAO study found that new drug applications
submitted by pharmaceutical companies to the FDA had increased at a
much slower pace than R&D expenditures, and that many of these were for
new uses of existing compounds, rather than for completely new drugs.
IP rights were among the factors some experts cited as slowing drug
development. See GAO, New Drug Development: Science, Business,
Regulatory, and Intellectual Property Issues Cited as Hampering Drug
Development Efforts, GAO-07-49 (Washington, D.C.: Nov. 17, 2006).
[4] 35 U.S.C. § 154.
[5] Pub. L. No. 98-417, 98 Stat. 1585.
[6] 21 U.S.C. § 355.
[7] For the purposes of this report, bioequivalent means the generic
drug has the same rate and extent of absorption and delivers the same
amount of active ingredients into a patient's bloodstream in the same
amount of time as the name-brand patented drug.
[8] United States Leadership Against HIV/AIDS, Tuberculosis, and
Malaria Act of 2003, Pub. L. No. 108-25, 117 Stat. 711.
[9] This compares with Giving USA's estimates that donations by U.S.
corporations and corporate foundations totaled $12.72 billion in 2006.
For further information, see "U.S. charitable giving reaches $295.02
billion in 2006: third straight year of growth," June 27, 2007, press
release, Giving USA Foundation. [hyperlink, http://www.aafrc.org].
[10] According to the WHO, its work on trade, IP rights, and access to
medicines can be summed up under two headings: (1) monitoring and
analyzing the pharmaceutical and health implications of international
trade agreements, and (2) assisting member states in assessing and
developing pharmaceutical and health policies and regulatory measures
that maximize the positive and mitigate the negative impact of those
agreements. In May 2006, WHO established an Intergovernmental Working
Group on Public Health, Innovation and Intellectual Property with a
mandate to prepare a global strategy and plan of action on essential
health research to address conditions affecting developing countries
disproportionately. A May 2007 resolution, adopted without U.S.
support, requests WHO "to provide as appropriate, upon request, in
collaboration with other competent international organizations,
technical and policy support to countries that intend to make use of
the flexibilities contained in the agreement on Trade-Related Aspects
of Intellectual Property Rights and other international agreements in
order to promote access to pharmaceutical products, and to implement
the Doha Ministerial Declaration on the TRIPS Agreement and Public
Health and other WTO instruments."
[11] TRIPS Agreement, Art. 39.3.
[12] For the text of these remarks, see Congressional Record, Senate,
S4322-4324, May 14, 2002.
[13] Based on paragraph 17, Ministerial Declaration, Fourth Ministerial
Conference, Doha, Qatar, November 14, 2001.
[14] See [hyperlink,
http://www.wto.org/english/tratop_e/trips_e/factsheet_pharm00_e.htm]
[15] See [hyperlink,
http://www.wto.org/english/tratop_e/trips_e/actsheet_pharm00_e.htm]
[16] According to USTR, developed country members were required to
implement the TRIPS Agreement fully as of January 1, 1996. Developing
countries were given a transition period for many obligations until
January 1, 2000. Recognizing the particular challenges faced by least-
developed countries, in 2005, the United States worked closely with
them and other WTO members to extend the implementation date for these
countries from January 2006 to July 2013. The least developed country
members in turn pledged to preserve the progress that some had made
toward TRIPs compliance.
[17] See [hyperlink,
http://www.wto.org/english/tratop_e/trips_e/factsheet_pharm00_e.htm]
[18] The term "compulsory licensing" does not appear in the TRIPS
agreement. However, it does appear in the Paris Convention, and WTO
members are required to comply with relevant portions of that
Convention (see TRIPS article 2.1). The phrase "other use without
authorization of the right holder" appears in the title of TRIPS
article 31.
[19] For the purposes of this report, parallel or grey-market imports
are products marketed by the patent owner or by someone else with the
patent owner's permission in one country and subsequently imported into
another country without the approval of the patent owner. For example,
suppose company A had a drug patented in two countries, Belladonna and
Calamine, which it sold at a lower price in Calamine. A parallel import
would occur if a second company B bought the drug in Calamine and
imported it into Belladonna at a price that was lower than company A's
price.
[20] While this deadline has now passed, as a practical matter
questions still remain about how soon pharmaceuticals produced in India
will be under patent. For example, generic drugs produced in India or
anywhere in the world before 2005 would be grandfathered under the old
system and thus not effectively subject to patents.
[21] To quote the chairman's statement on the General Council decision
on the implementation of paragraph 6: "The following Members have
agreed to opt out of using the system as importers: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland,
Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway,
Portugal, Spain, Sweden, Switzerland, United Kingdom and United States
of America. Until their accession to the European Union, Czech
Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,
Slovak Republic and Slovenia agree that they would only use the system
as importers in situations of national emergency or other circumstances
of extreme urgency. These countries further agree that upon their
accession to the European Union, they will opt out of using the system
as importers. Some other Members have agreed that they would only use
the system as importers in situations of national emergency or other
circumstances of extreme urgency: Hong Kong (China), Israel, Korea,
Kuwait, Macao (China), Mexico, Qatar, Singapore, Chinese Taipei,
Turkey, United Arab Emirates."
[22] For the purposes of this report, diversion is the importation and
resale of pharmaceuticals intended for use in another country. A
typical example might involve pharmaceuticals donated to a relief
organization in a poorer country that make their way into developed
nations for sale at a substantial markup. Diversion presents its
practitioners with opportunities to generate illegitimate profits by
diverting drugs from their intended recipients whenever pharmaceutical
companies distribute high value drugs at below market prices.
[23] 19 U.S.C. §3802.
[24] See 35 U.S.C. § 156.
[25] See 21 U.S.C. § 355.
[26] The side letters on public health generally state that the
obligations under the IP chapter do not affect a Party's ability to
take necessary measures to protect public health by promoting access to
medicines for all, in particular concerning cases such as HIV/AIDS,
tuberculosis, malaria, and other epidemics as well as circumstances of
extreme urgency. The side letters also generally state that the
obligations under the IP chapter do not prevent the effective
utilization of the TRIPS/health solution. For specific wording, see the
Colombia, Bahrain, Oman, Morocco, CAFTA-DR, Peru, and Panama free trade
agreements and associated side letters.
[27] Not captured in this number are other statements on public health
in the FTAs such as in the preamble of the Chile FTA IP chapter that
states, "Recognizing the principles set out in the Declaration on the
TRIPS Agreement on Public Health, adopted on November 14, 2001, by the
WTO at the Fourth WTO Ministerial Conference, held in Doha, Qatar."
According to USTR officials, such a statement is part of the
interpretive context of an FTA.
[28] The side letter on public health constitutes a formal
understanding that forms part of the interpretive context of a
signed/implemented FTA as described in the Vienna Convention on the Law
of Treaties, Article 31.
[29] The Chile, Singapore, Australia, Morocco, Bahrain, CAFTA-DR, Oman,
and Republic of Korea FTAs state that 5 years of data exclusivity are
to be provided. The Peru, Colombia, and Panama FTAs will require the
provision of data exclusivity for a reasonable amount of time and state
that a reasonable amount of time normally means 5 years.
[30] The bipartisan trade deal also included agreements and amendments
on a variety of other areas in these FTAs, including labor standards,
environmental standards, government procurement, port security, and
investment.
[31] See 19 U.S.C. §§ 2242, 2412. Special 301 is a congressionally
mandated report that requires USTR to identify, within 30 days of the
submission of the annual National Trade Estimates report, foreign
countries that (1) deny adequate and effective protection of IP rights
or fair and equitable market access to U.S. persons that rely on IP
protection, and (2), of those countries identified in (1), priority
countries. Priority countries, as defined by law, are countries (1)
that have the most onerous or egregious acts, policies, or practices
that deny adequate and effective IP rights with the greatest adverse
impact on the relevant U.S. goods, and (2) that are not entering into
good faith negotiations or making significant progress in bilateral or
multilateral negotiations to provide adequate and effective IP
protection. In making these identifications, USTR takes into account
the history of IP laws and practices of the foreign country and the
history of efforts of the United States, and the response of the
foreign country, to achieve adequate and effective protection and
enforcement of IP rights.
[32] 19 U.S.C. §§ 2152, 2155.
[33] HHS, USAID, Commerce, and State, among others, participate in
varied levels of the interagency advisory process through the Trade
Policy Review Group (TPRG) and the Trade Policy Staff Committee (TPSC),
in which agency officials may review the texts of FTAs and make
comments. TPSC and TPRG are administered and chaired by USTR, and the
groups are composed of 19 executive agencies and offices. The TPSC is
the primary operating group, with representation at the senior civil
service level, and if policy agreement is not reached in the TPSC, or
if significant policy questions are being considered, issues are taken
up by the TPRG, with representation at the Deputy USTR/Under Secretary
level.
[34] During the TRIPS and public health debates at the WTO, USTR
officials consulted with HHS officials, as well as with State and PTO
officials, and HHS's Office of Global Health Affairs (OGHA) was very
involved in developing the U.S. proposals for the paragraph six
solution.
[35] Department of Commerce officials cited the Doha negotiations, the
rechartering of the industry trade advisory committees, and the time
required to send out notices of position openings, vet applicants, and
obtain security clearances.
[36] Ctr. for Policy Analysis on Trade and Health (CPATH) v. Office of
the United States Trade Representative, No. 05-05177 MJJ (N.D.Cal. June
30, 2006), appeal docket, No. 06-16682 (9th Cir. Sept. 14, 2006). The
industry advisory committees cited in the lawsuit are ITAC-4 (Consumer
Goods), ITAC-5 (Distribution Services), ITAC-8 (Information and
Communications Technologies, Services and Electronic Commerce), ITAC-
10 (Services and Finance Industries), ITAC-14 (Customs Matters and
Trade Facilitation) and ITAC-16 (Standards and Technical Trade
Barriers).
[37] Pursuant to Federal Advisory Committee Act, an advisory
committee's membership must be "fairly balanced in terms of the points
of view represented and the functions to be performed by the advisory
committee." 5 U.S.C. App. 2 § 5.
[38] Name recently changed to Knowledge Ecology International.
[39] Countries that have the most onerous or egregious acts, policies,
or practices and whose acts, policies, or practices have the greatest
adverse impact (actual or potential) on the relevant U.S. products must
be designated as "Priority Foreign Countries." Countries placed on the
Priority Watch List are the focus of increased bilateral attention
concerning the problem areas.
[40] Placement of a trading partner on the Priority Watch List or Watch
List indicates that particular problems exist in that country with
respect to IP rights protection, enforcement, or market access for
persons relying on intellectual property (IP).
[41] Any country that was previously designated a Priority Foreign
Country but entered into good-faith negotiations and/or is making
progress is placed under Section 306 monitoring. Under Section 306,
USTR monitors a country's compliance with bilateral IP agreements that
are the basis for resolving an investigation under Section 301.
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